The Portfolio Committee on Trade, Industry and Competition has called for urgent government intervention as the steel industry is facing a crisis that threatens thousands of jobs.
During a follow-up engagement with the DTIC and stakeholders from the steel and metal fabrication sector yesterday, on (i) an update on developments within the sector, (ii) progress made in addressing the concerns previously raised, and (iii) any further proposals or interventions that should be considered to support industrial growth, competitiveness, transformation, and employment within the steel value chain.
Stakeholders raised concerns regarding the sector's continued decline due to global competition, policy misalignment, weak demand, poor logistics, high production costs, including electricity, as well as the weak network industries and declining investment in this specific sector.
Furthermore, this has been exacerbated by a shift in domestic demand to imported steel products, an increased demand for low carbon steel manufacturing processes while the local industry remains carbon-intensive, and excess global steel supply, among others. This has led to a decline in the industry accompanied by significant job shedding over many years.
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In addition, certain stakeholders raised concerns on the perceived distortionary impact of the Preferential Pricing System and export control on the scrap metal recycling industry and the livelihoods of waste pickers.
Stakeholders proposed the following interventions, among others:
Binding commitments for and enforcement of local public procurement to boost demand for domestic steel products, particularly through public infrastructure spend and supplier development programmes of State-owned Enterprises;
Targeted interventions and support to assist sub-sectors such as the wire and the scrap metal industries;
Resolution of electricity pricing negotiations and inefficiencies in rail and freight logistics;
Financial support, such as development financing and tax incentives, for downstream industries;
A rail reindustrialisation compact, led by the Presidency; and
Stronger enforcement of policies and trade remedies to prevent circumvention thereof, illicit and underpriced imports.
The committee welcomed the progress made by the DTIC and its entities in implementing trade remedies, assisting with the negotiations of electricity prices and support to resolving the crisis at ArcelorMittal South Africa.
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However, the committee was of the view that there is a need for effective and thorough engagement with the sector in developing a clear, coordinated, state-led strategy and intervention to stabilise and revive this industry. The committee called on the DTIC to work with its counterparts to resolve concerns such as the implementation and enforcement of localisation and local public procurement policies and tighten import enforcement to curb illicit steel product imports.
The Chairperson of the committee, Mr Mzwandile Masina, said: "The steel sector must be saved. However, this requires holistic government support and industry investment to ensure that a modern and competitive sector can emerge. Therefore, the DTIC and its entities should prioritise the review of the Master Plan and affected interventions."
