Issued by: the electric steel producers of South Africa Due to an oversupply of steel in the global and local market, the South African government
Issued by: the electric steel producers of South Africa
Due to an oversupply of steel in the global and local market, the South African government faces a critical decision: safeguard the future of the entire steel industry or prop up ArcelorMittal’s outdated and heavily polluting operations.
We, the electric steel producers of South Africa, rely on scrap ferrous steel as a critical raw material to produce long products including steel bars and wire rods used in construction and mining. We are calling on the government to keep the export tax on scrap steel in place as it helps ensure the viability of greener domestic steel production by ensuring sufficient scrap availability.
ArcelorMittal, who still produces steel from iron ore in a heavily polluting process, is pushing for government to remove the scrap metal export tax—a move that would cripple smaller, greener steel producers who collectively make up 75% of South Africa’s long steel production capacity.
Disadvantages
Removing the export tax would threaten the survival of many local steel mills, lead to thousands of job losses and undermine the government’s stated commitment to industrial diversification and sustainability.
Scrapping the export tax would also fly in the face of urgent worldwide trends to recycle and to decarbonise the steel industry by moving away from iron ore-based steel production. To support this objective, many countries have legislated measures to protect and retain their scrap metal for beneficiation into cleaner and greener steel products.
Together our newer and more environmentally friendly steel manufacturing processes, support well over 5,000 jobs, are cleaner and more sustainable, and are better suited to access international markets who place ever increasing stringent standards on the origin of their steel imports.
Affordable scrap is made possible by a tax instituted on scrap metal destined for export, encouraging this raw material to be made locally available. This allows local steel firms to access scrap in order to create finished products in line with government policies designed to enhance local industrialisation and beneficiation.
Manufacturing within South Africa makes far more economic sense than allowing foreign companies and countries to benefit from using our scrap steel to support their local industries and then selling their finished steel products back to South Africa.
ArcelorMittal already benefits from government protection in the flat steel sector (the other SA steel sector), where despite the fact that it has a virtual monopoly in local flat steel production, government tariffs protect the company from lower-priced imports. In addition, it is important to note that ArcelorMittal’s poor financial performance is independent of the scrap export tax.
While we agree that lowering electricity and transport costs is vital as requested by ArcelorMittal, prioritising ArcelorMittal at the expense of greener producers would only serve to hurt the broader economy and likely lead to the closure of the firms involved in environmentally friendly steel production. Removing the tax would take SA a few steps back in its decarbonisation push and result in a less competitive local manufacturing industry.
We call on the government not to favour ArcelorMittal as it addresses the oversupply of local steel. It is time for the government to craft a balanced, forward-looking steel strategy that protects all players in the sector, ensuring a competitive, greener steel industry that aligns with global trends. South Africa cannot afford to favour a single company at the cost of thousands of jobs, industrial sustainability, and a vibrant, competitive market. We look forward to engaging with the government to ensure that decisions are taken in the best interest of the whole industry and the country.