ITAC Reviews Steel Tariffs as AMSA Faces Newcastle Mill Shutdown
The International Trade Administration Commission of South Africa has officially launched a review of the country’s steel tariff structure, alongside ongoing surveillance of steel imports across all stages of the supply chain, from upstream raw materials to downstream finished products. This review follows a Ministerial directive and aims to assess the effectiveness of the existing trade measures, especially in the context of the recent decision by ArcelorMittal South Africa to close its long-products business and place its Newcastle mill operations under care and maintenance.
This move from AMSA, one of the country’s largest steel producers, has sparked significant concern within the steel industry, particularly regarding the future of steel manufacturing in South Africa. The decision is being viewed as a response to what AMSA sees as unsustainable market conditions, including rising costs and ongoing challenges from imported steel products, especially those coming at unfairly low prices. The review by ITAC is seen as a critical step in addressing these issues and providing clarity on how South Africa can protect its local steel sector in the face of growing competition from international markets.
The Role of ITAC in South Africa's Steel Sector
ITAC plays a crucial role in regulating trade measures and tariffs in South Africa. As part of its mandate, it is tasked with ensuring that the steel industry remains competitive, not only by setting tariffs on imports but also by investigating claims of unfair trade practices such as dumping. Dumping refers to the practice of selling products in foreign markets at prices lower than their market value, a strategy that has been used by some international competitors to gain a foothold in South Africa at the expense of local producers.
In light of AMSA’s announcement to close its Newcastle facility, ITAC’s review is being seen as an opportunity to reassess whether current tariffs and trade remedies are effectively shielding local steelmakers from injurious imports. These tariffs play an essential role in providing price protection for South Africa’s steel industry, but concerns have grown about whether they are sufficient, given the scale of the challenges faced by AMSA and other local manufacturers.
Scrutiny of Upstream and Downstream Steel Imports
The review will not be limited to the assessment of tariffs but will also extend to the surveillance of steel imports at various stages in the production process. This includes monitoring the upstream import of raw materials such as iron ore and scrap metal, the midstream import of semi-finished products, and the downstream import of finished steel products. All of these stages are crucial to maintaining a stable domestic steel market, as they influence both the availability and cost of steel in South Africa.
An important aspect of this review is the regulation of scrap metal exports through the Price Preference System. The PPS is a trade mechanism designed to control the export of scrap metal and ensure that a sufficient amount remains available for domestic steel production. ITAC has taken an active role in exploring alternatives to support AMSA, especially regarding the regulation of scrap metal exports, which are vital for steel production. In September 2024, the commission issued a gazette announcing a review of the PPS guidelines, focusing on issues such as price discounts for ferrous and non-ferrous scrap metals.
Addressing Unfair Competition in the Steel Market
A central issue driving the review is the allegation of injurious import competition, particularly in relation to alloy steel coils, rail, and hot-rolled steel products. AMSA has raised concerns about the competitive pressure these imports place on its operations, claiming that they are sold at below-market prices, a practice that is detrimental to local production. In response, ITAC is investigating these trade remedy applications to determine whether corrective measures, such as anti-dumping tariffs, should be imposed to protect the domestic steel industry from unfair competition.
The outcome of these investigations will be pivotal in shaping future trade policies. Once completed, ITAC will submit its recommendations to the Minister of Trade, Industry, and Competition, who will then decide on the next steps. These recommendations could lead to the imposition of higher tariffs, stricter regulations on steel imports, or the introduction of other trade protection measures designed to support South African manufacturers.
Efforts to Prevent Newcastle Mill Closure
Alongside the review of trade measures, ITAC has been engaged in discussions with various stakeholders, including AMSA, government departments, and public institutions, to explore potential solutions to prevent the closure of the Newcastle mill. This facility, which has been a key part of AMSA’s operations for years, is located in the industrial heart of South Africa’s steel industry, and its closure would have significant economic and social consequences for the surrounding region.
Despite these efforts, AMSA has expressed its belief that the current measures have not been enough to resolve the financial and operational challenges faced by the Newcastle mill. The company’s assessment suggests that the closure is unavoidable unless more substantial changes are made to the operating environment. While ITAC and other bodies continue to explore solutions, AMSA’s decision highlights the extent of the challenges the South African steel industry faces in adapting to both local and global market forces.
Balancing Evidence and Fair Processes
Chief Commissioner Ayabonga Cawe emphasized the need for decisions to be based on a balanced assessment of the available evidence. ITAC’s role is to ensure that the processes used to determine trade measures and tariffs are administratively and procedurally fair. This includes considering the interests of all stakeholders involved in the steel industry, from large manufacturers like AMSA to smaller businesses that rely on affordable steel imports.
It is crucial that any decisions made in response to the review of steel tariffs and imports are informed by sound data and thorough analysis. The goal is to create a regulatory environment that supports the long-term sustainability of the South African steel industry, while also ensuring that the country remains competitive in the global market.
