Employer body slams underperforming, government protected steel mill

14 August 2019 | Web Article Number: ME201915741

Commerce & Trade
Finance & Investment
Import / Export
Metals & Alloys

THE National Employers’ Association of South Africa (NEASA) has questioned whether the country can still afford ArcelorMittal South Africa (AMSA).

NEASA Chief Executive, Gerhard Papenfus said that according to AMSA’s own figures, consumption of its steel has slumped to a ten-year low - falling to 70% of the level achieved in 2008.

He added that foreign owned AMSA operates a 70-year-old “antiquated” steel mill which, both in terms of price and quality, cannot compete with international production facilities.

“However, instead of upgrading its mill, AMSA enjoys government protection, by means of import duties (currently 20%), in order to deter the Steel Downstream from importing cheaper, better quality steel. This arrangement severely disadvantages the steel downstream, causing it to be uncompetitive and serving as a slow poison.”

Papenfus said AMSA was to blame for its own downfall.

‘It is quite amazing that AMSA, benumbed by its own short-term interests and survival, refuses to admit that the protectionist duties it convinced government to grant them, is contributing to the slump in South African steel consumption. The uncompetitive price of steel negatively impacts on the buying power of its customers.”

Papenfus said AMSA was also putting pressure on power utility, ESKOM, as its steel mill is 60% less economic in terms of electricity usage. As a result, AMSA is currently pursuing tariff relief from Eskom.

“Should Eskom agree to that, the burden of paying for AMSA’s electricity usage will shift from AMSA to the South African public, including the steel downstream.

“South Africa Incorporated has inherited the albatrosses of the likes of Eskom, SAA, the SABC and all the dysfunctional state-owned enterprises. Over and above these burdens, AMSA is forced down the throat of the Steel Downstream,” Papenfus said.

AMSA had not responded at the time of publishing.

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