Depending on which side of the fence you find yourself, protectionism can be a good or a bad thing.
South Africa’s International Trade Administration Commission (ITAC) and government seem to have made their minds up about which side of the fence they sit on.
The paradox of slowing South Africa’s deindustrialisation is a tough one to digest. Globalisation has shown us that being too reliant on certain supply chains can have immediate and costly consequences when those supply chains are interrupted.
South Africa’s metals and minerals sectors received a measure of support during May and June as government and industry moved to address two of the most pressing challenges facing local manufacturing – rising import competition and escalating energy costs.
At the same time, renewed international interest in the country’s mineral resources is creating opportunities for future investment in downstream processing and beneficiation.
The South African government’s decision to increase import duties on a range of steel products is aimed at providing relief to domestic steel producers that have struggled against a sustained influx of imported material. The revised tariffs, which apply to products including flat steel, bars, rods, tubes and pipes have followed ITACs recommendations.
The move comes at a time when local steelmakers continue to face weak domestic demand, high operating costs and growing competition from imported steel, particularly from China. Industry figures indicate that imported steel accounts for more than a third of South African consumption, placing pressure on local producers and raising concerns about the long-term sustainability of domestic steelmaking capacity.
For the broader metalworking sector, the tariffs are intended to provide local mills with breathing space to improve competitiveness and secure investment. Downstream manufacturers will continue to monitor the impact on steel pricing and availability, given the importance of competitively priced material to fabrication and general engineering activities.
While the steel sector has received protection through trade measures, the ferrochrome industry has secured support through energy reform. In a significant development for South African beneficiation, Glencore-Merafe and Samancor Chrome announced that they would cancel planned retrenchments following the approval of substantially reduced electricity tariffs for ferrochrome producers.
Electricity prices have increased sharply over the past two decades, eroding the competitiveness of local ferrochrome production and contributing to the closure of numerous smelting operations.
The approval of discounted electricity rates by the national energy regulator is expected to support the restart of idle capacity and improve the viability of domestic smelting operations. The intervention is particularly important given South Africa’s position as the world’s largest producer of chrome ore and the strategic importance of ferrochrome in stainless steel manufacturing.
South Africa is also attracting growing international attention as a source of critical minerals. The European Union recently launched its first dedicated investment roadshow in the country, targeting opportunities linked to mineral extraction, processing and beneficiation.
The initiative forms part of a broader European strategy to secure reliable supplies of minerals required for renewable energy technologies, batteries, electronics and advanced manufacturing. South Africa’s reserves of platinum group metals, manganese and other strategic minerals position the country as a key partner in these supply chains.
For the local manufacturing sector, the significance of such investment extends beyond mining alone. Increased focus on mineral beneficiation and downstream processing could stimulate demand for processing equipment, materials handling systems, fabrication services and engineering expertise.
Collectively, these developments point to a growing recognition of the need to preserve and expand South Africa’s industrial base. Whether through tariff protection, energy support or international investment, the common objective remains the same: Strengthening local production capacity while creating opportunities for greater value addition within the country’s metals and minerals sectors.
But to impose tariffs on products that are not made locally does not make sense and points to exploiting local industry somewhat.
Rail is up next, with ArcelorMittal Rail and Structures, a division of ArcelorMittal South Africa, making an application for an increase in the general rate of customs duty on rails, from 5% to 10% ad valorem.
Pick your poison, as they say.
Damon Crawford
Online Editor / Journalist
