ArcelorMittal SA (Amsa) has lashed out at amendments to the price preference system (PPS) governing scrap metal and called for their immediate suspension as it feels they will lead to further job losses.
The International Trade Administration Commission of SA (Itac), which manages SA’s import and export controls and conducts trade remedy investigations, last week gazetted its review of the 2013 PPS for scrap metal.
Itac chief commissioner Ayabonga Cawe said the process of reviewing the PPS took about 13 months to complete. One of the main features of the new regime will see discounts for domestic ferrous scrap-consuming industries reduced from 30% to 25%.
Amsa said in a statement that SA’s goal to have a globally competitive steel sector cannot be achieved by artificially transferring value from recyclers, waste-pickers and primary and downstream manufacturers to a limited number of mini-mills.
“It is in the national interest to immediately suspend and review the amended PPS; release the DTIC [department of trade, industry & competition] scrap sector report so it can be compared to the independent Econometrix report provided to Itac and the DTIC; then correct the error of having both the PPS and the export tax; and for a transparent, evidence-based policy process to be followed, focusing on the full industrial value chain,” the company said.
“SA needs a balanced scrap and steel policy that supports jobs, competitiveness and long-term industrial capacity, not narrow interests.”
SA’s embattled steel industry has bled 25,000 jobs since 2009. The losses that continued after the introduction of the PPS in 2013, a report by independent economic research consultancy Econometrix shows.
The report, released in February, points to the government’s interventionist policies in the steel industry, in which production has plunged 40% below its 2006 peak. The data shows that about 7,500 jobs were lost in the sector since 2014 after the introduction of the PPS the previous year.
The policy regulates the export of ferrous and non-ferrous scrap by not allowing the exportation of scrap metal unless it has first been offered to domestic consumers at a discount to the international price at the time of sale.
The report found that the PPS and scrap export tax policies caused an imbalance in the sector, creating an unfair advantage for mini-mills.
Cawe acknowledged Amsa’s historical misgivings about PPS.
“Amsa would have raised many issues, saying this system is giving a lot of benefits to the mini-mills. One of the questions we have been asked is why such a small reduction in the discount. For us, we considered a lot of things, including logistics costs as well as demand conditions of the ferrous market,” Cawe said.
Amsa’s harsh reaction to the amendment of the PPS comes a day after the group said the process to place its long steel business into care and maintenance has proceeded.
The group said most plants at Newcastle Works have been placed into care and maintenance, and production has ceased. “Limited trading will continue to dispatch the remaining stock,” it said.
Amsa in September told its employees that attempts to save its long steel business have failed, with 3,500 workers now set to lose their jobs.
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