Arcelor Mittal’s Protection by Government Leads to Job Losses

Issued by Mat Cuthbert MP – DA Shadow Deputy Minister: Trade and Industry and Economic Development
21 Aug 2019 in News

The Democratic Alliance (DA) notes with concern steel manufacturer, Arcelor MittalSA’s (AMSA) admission that the market’s consumption of its steel has crashed to a ten-year low. This reveals a 70% decrease since 2008.

This is unacceptable considering the level of protection provided to AMSA by the tax payer and government.

Moreover, it is well documented that AMSA’s production methods are outdated and archaic, its product quality poor and its pricing strategy out of sync with international markets.

As the beneficiaries of a 10% custom duty and 12% safeguard duty on steel imports, Government has decimated competition within the South African steel industry – particularly the steel downstream which puts at risk 100 000 job.

In July 2019, AMSA announced to the public that they may shed up to 2 000 jobs as its revenue projections revealed that they would lose up R650 Million. AMSA has cited increased electricity, freight and primary raw costs as its reasons for the proposed job-shedding.

After AMSA was slapped with a R1.5 Billion penalties for uncompetitive practices in 2016, it committed to spending R4.64 Billion in capital expenditure over the next 5 years as a part of its settlement agreement. The DA would like to know how much has been spent and how many jobs have been created as a result of this expenditure?

It is now of critical importance that Minister Patel tells us what the success or failure of this deal was so that Parliament can best decide how to move forward with any further assistance for AMSA.

It would be unthinkable to continue to throw money at AMSA which will continue to costs jobs in the downstream sector.

We propose that the Minister solicits a full analysis on AMSA’s effects on the steel downstream and in doing so generates alternatives that open up the steel market to new market entrants – who are able to provide cheaper, better quality steel to the South African market.