Steel producer ArcelorMittal South Africa (AMSA) confirmed on Wednesday that it had submitted applications to the International Trade Administration Commission of South Africa (Itac) in December for “specific safeguard duties” on bars and rods, rebar, wire rod, hot rolled coil, cold rolled coil and plate.
The JSE-listed company – which is also pursuing a R4.5-billion rights issue, following five consecutive years of losses – had already received 10% protection against three of its ten applications to Itac and expected determinations on the remaining applications “in early 2016”.
On December 18, Itac raised duties on wire rod and rebar from 0% to 10%, having already granted 10% protection on galvanised and colour-coated steel a few months earlier. The 10% tariff level is the “bound rate” allowed for under South Africa’s World Trade Organisation commitments.
However, AMSA indicated previously that it would seek further protection from “unfair” Chinese steel imports, with outgoing CEO Paul O’Flaherty having indicated that it could request safeguard duties of up to 40% on certain steel grades.
AMSA told Engineering News Online that safeguard duties were intended to cover serious injury experienced by the relevant industry over and above the applied tariff rate. "With regard to the level of the safeguard duty, we are unable to comment at this stage as it is a matter to be decided by Itac," the company added.
Itac was required to conduct an investigation into AMSA’s claims before imposing any safeguard duties, but O’Flaherty had called for urgency, arguing that additional protection was required to ensure the survival of the domestic primary steel sector.
However, other domestic market participants would likely oppose greater levels of protection, with some re-rollers and wire-rod producers having already objected to the 10% duties.
In an operational update, the company also indicated that engagements with government were “advanced and ongoing” on both the pricing mechanism for AMSA steel and the designation of local steel for State procurement and infrastructure projects.
It added that “without the requisite tariffs as applied . . . and without the initiatives committed by government regarding the use of local steel for government infrastructure projects, the steel industry and the company will need to undertake significant structural change”.
The rights offer, meanwhile, was expected to yield R1.3-billion by about January 25, after partially settling ArcelorMittal Group loans from the proceeds. The offer had been fully underwritten by the ArcelorMittal Group, which holds 47% of the South African company.
Meanwhile, AMSA said its black economic-empowerment transaction was on track with net cash expected by July 2016.