SCAW Metals chief executive Boron Barnes yesterday came to the defence of the Steel Master Plan, the blueprint aimed at reviving the steel industry, saying it had given an opportunity to industrialise South Africa.
Barnes was responding to comments by Dean Macpherson, a DA member of Parliament, who described the Steel Master Plan as nothing more than “a closed shop agreement at the behest of special interests”.
Speaking during a portfolio committee meeting on trade, industry and competition, Macpherson blamed the government for siding with primary steel producers at the expense of the downstream industry, and said the plan was based on driving an uptake of steel products but there was little demand for steel products.
“We have gone back a decade in our investment in public infrastructure investment. State owned entities are a mess, Prasa is a disaster, Eskom is bankrupt. So where does the demand for infrastructure funding come from for them to buy South African steel products?”
Macpherson also cited the so-called “investment strike” in the private sector-because of the unwillingness to invest due to the incoherent approach to economic policy.
“There is very little domestic demand and the anaemic flat growth of 1.5 percent. I am interested to know where the domestic demand for steel comes from,” said Macpherson.
The Steel Master Plan, which commits to enabling competition in the sector, was launched in June amid the decline in the local production and steel demand coupled with China supplying a rising share of South Africa’s domestic steel consumption.
However, Barnes said it was the obligation of the steel industry to create jobs in South Africa in an environment with record high unemployment.
“In this industry where we have iron ore on the ground and scrap metal. To say we are incapable of making steel in the South because we are just incapable of doing it is shameful. There is just no reason why South Africa should be importing jobs,” said Barnes. Barnes said China has been paying a 13 percent steel rebate for companies that export steel, resulting in the crippling of South Africa’s steel industry and steel industries in other parts of the world.
“On the whims of China they decided to stop the export rebates, as a result of that we have skyrocketing prices in the world of steel because China decided to get rid of an export rebate. China is considering putting an export tax on steel. Had Minister Patel not got involved through various duties and other trade mechanisms, we could have lost ArcelorMittal South Africa,” he said.
Harry Kassel, the chief executive of Reclamation SA, one of South Africa’s largest players in the steel recycling sector, who was also in the meeting, said he could not understand the enormous push back against the price preference system (PPS).
“The question I would like to pose is which of the steel recycling companies are not doing well and have closed down? We are in the steel recycling industry and have not heard of any closures. The PPS is a policy that has saved the steel manufacturing industry, and has created a situation where recyclers are forced to further invest in infrastructure and beneficiation rather than the mass export of products,” he said
Trade, Industry and Competition Minister Ebrahim Patel extended the PPS for two years.
BUSINESS REPORT ONLINE