The National Employers’ Association of South Africa (Neasa) has reiterated its dissatisfaction with government's approval of an extended 8% safeguard duty on hot rolled coil, bringing the total duty payable on this product to 18%.

This follows after Neasa launched an urgent application in the Gauteng High Court last week to stop government form implementing “yet another” set of duties on coated products.

The matter is set to be heard on August 18.

Neasa CE Gerhard Papenfus says the downstream steel industry, which Neasa represents, has tried convincing the International Trade Administration Commission of South Africa (Itac) to desist from recommending these changes to legislation.

Trade, Industry and Competition Minister Ebrahim Patel issued the directive to the commission, asking Itac to determine how the Price Preference System can be amended to ensure a sustainable scrap metal supply to the primary steel producing industry.

Itac subsequently recommended nine new tariff codes, including an export tax rate of R1 000/t for ferrous metals, R3 000/t for aluminium and R1 000/t for waste and scrap metals.

Neasa explains that the purpose of safeguard duties is to temporarily protect South Africa’s primary steel producer, which Neasa believes is not competitive, to give it time to get its house in order.

According to World Trade Organisation rules, safeguard duties may therefore only apply for a period of three years. The previous safeguard duties for this product expired on August 10.

Papenfus says that, during this period, primary steel producer ArcelorMittal South Africa (AMSA) has done nothing to enable it to supply competitively priced raw material to the downstream steel sector.

That, however, did not deter government from extending this duty for yet another year.

“This decision by government is a blatant move that defies all rules and logic. The motive behind this decision is questionable. Why continue to protect AMSA − this loss-making monopoly; a liability to the steel downstream and the country?

“Can it be a matter of government stopping at nothing to lay their hands on even more funds; after they drained State-owned entities and are now targeting the private sector to extract more money?”

“These duties are just another dose of the slow poison administered to the steel industry. The consequence will simply be an acceleration of its gradual decline, further contributing to de-industrialisation with its nasty tentacles: unemployment and poverty,” Papenfus states.