Graphite electrodes, for use in furnaces, duty increase

Decision appears to be absurd in view of local manufacturer closing manufacturing plant.

The South African Revenue Service (SARS) has announced an increase in the “General” rate of customs duty (Schedule No.1 Part 1) on graphite electrodes, classifiable under tariff subheading 8545.11, from free of customs duty to 10% ad valorem. The application was published in the Government Gazette of 22 March 2013 and took 238 days (just under 8 months) to complete.

On November 22, Itac published a notice of an investigation into the alleged dumping of graphite electrodes, for use in furnaces, originating in or imported from the People’s Republic of China and India. Comment was due by December 30, 2013.

The applicant, GrafTech South Africa (Pty) Ltd, provided the following reasons for the application (1) it is the only manufacturer of graphite electrodes in the SACU region and is suffering serious injury as a result of rapidly increasing imports at declining import unit prices; (2) the low priced imports have severely affected the profitability of the business; (3) the company’s investment in the SACU economy is under threat because of the serious injury being caused by imports; and (4) as the sole SACU region manufacturer of graphite electrodes, GrafTech South Africa (Pty) Ltd, and its products are essential to a number of industries, and it is in the best interest of the SACU economy to retain this important investment.

A number of respondents, including Botswana’s Ministry of Trade and Industry, objected to this duty application, which appears to have been signed off on the 7th October 2013 by Itac Chief Commissioner Siyabulela Tsengwe, according to documents on hand.

Closure of GrafTech graphite electrode manufacturing plant
The decision appears to be absurd especially in view of a letter sent to customers by Darrell A. Blair, Vice President, Graphite Electrode Sales on the 31st October 2013. In it Blair announces and I quote: “A series of restructuring actions that are scheduled to take effect over the coming months. These efforts involve realigning our production platform, which includes the closure of the Meyerton, South Africa: Graphite Electrode Manufacturing Plant – subject to ongoing union and workforce consultations, and the closure of plants in Brazil and Russia.”

Negotiations are ongoing but as one industry player said: “Imports from the European Union (EU), the European Free Trade Association (EFTA), and the Southern African Development Community (SADC) are now being protected by this duty. Countries other than these are being impacted, despite there not being a local manufacturer, which was what the original application was about.”