South Africa's electric steel producers are urging the government to retain the export tax on scrap steel, highlighting its critical role in ensuring the viability of greener domestic steel production by securing adequate scrap availability.
Amid an oversupply of steel in both global and local markets, the government faces what the group describes as a "critical decision" - to either safeguard the future of the entire steel industry or support "[multinational steel manufacturer] ArcelorMittal South Africa's (AMSA) outdated and heavily polluting operations."
South Africa's electric steel producers include SCAW Metals, Cape Gate, Veer Steel Mills, Unica Iron and Steel, Force Steel, and Coega Steel. These manufacturers rely on ferrous scrap steel as a key raw material to produce long products such as steel bars and wire rods, used in construction and mining.
AMSA, which still employs iron-ore-based steelmaking through "heavily polluting processes," is lobbying for the removal of the scrap metal export tax. The group warns that such a move would devastate smaller, environmentally friendlier steel producers, which collectively account for 75% of South Africa's long steel production capacity.
"Removing the export tax would jeopardize the survival of many local steel mills, lead to thousands of job losses, and undermine the government's commitment to industrial diversification and sustainability," the group states.
Scrapping the tax, they argue, would contradict global efforts to promote recycling and decarbonization by reducing reliance on iron-ore-based steelmaking. Many countries have implemented measures to retain scrap metal for beneficiation into greener steel products.
"Our newer, more environment-friendly manufacturing processes support over 5,000 jobs and meet stringent international standards for steel imports," the group emphasizes.
The export tax ensures the affordability of scrap metal for local manufacturers, aligning with government policies aimed at industrialization and local beneficiation. The group asserts that manufacturing within South Africa provides greater economic benefits than exporting scrap steel to foreign industries.
The group also highlights that AMSA already enjoys significant government protection in the flat steel market, where tariffs shield the company from cheaper imports, despite its local monopoly. They argue that AMSA's "poor financial performance" is unrelated to the scrap export tax.
While acknowledging the need for lower electricity and transport costs across the industry, the group opposes prioritizing AMSA's interests over greener producers, warning that such favoritism could harm the broader economy and force environmentally friendly steelmakers to shut down.
The group calls for a more balanced approach to addressing the steel market oversupply.
"It is time for the government to adopt a forward-looking strategy that protects all players in the sector, fosters a competitive and greener steel industry, and aligns with global trends. South Africa cannot afford to prioritize a single company at the expense of jobs, sustainability, and a vibrant steel market."
The group looks forward to engaging with the government to ensure that decisions are made in the best interests of the entire steel industry and the country.
Amid an oversupply of steel in both global and local markets, the government faces what the group describes as a "critical decision" - to either safeguard the future of the entire steel industry or support "[multinational steel manufacturer] ArcelorMittal South Africa's (AMSA) outdated and heavily polluting operations."
South Africa's electric steel producers include SCAW Metals, Cape Gate, Veer Steel Mills, Unica Iron and Steel, Force Steel, and Coega Steel. These manufacturers rely on ferrous scrap steel as a key raw material to produce long products such as steel bars and wire rods, used in construction and mining.
AMSA, which still employs iron-ore-based steelmaking through "heavily polluting processes," is lobbying for the removal of the scrap metal export tax. The group warns that such a move would devastate smaller, environmentally friendlier steel producers, which collectively account for 75% of South Africa's long steel production capacity.
"Removing the export tax would jeopardize the survival of many local steel mills, lead to thousands of job losses, and undermine the government's commitment to industrial diversification and sustainability," the group states.
Scrapping the tax, they argue, would contradict global efforts to promote recycling and decarbonization by reducing reliance on iron-ore-based steelmaking. Many countries have implemented measures to retain scrap metal for beneficiation into greener steel products.
"Our newer, more environment-friendly manufacturing processes support over 5,000 jobs and meet stringent international standards for steel imports," the group emphasizes.
The export tax ensures the affordability of scrap metal for local manufacturers, aligning with government policies aimed at industrialization and local beneficiation. The group asserts that manufacturing within South Africa provides greater economic benefits than exporting scrap steel to foreign industries.
The group also highlights that AMSA already enjoys significant government protection in the flat steel market, where tariffs shield the company from cheaper imports, despite its local monopoly. They argue that AMSA's "poor financial performance" is unrelated to the scrap export tax.
While acknowledging the need for lower electricity and transport costs across the industry, the group opposes prioritizing AMSA's interests over greener producers, warning that such favoritism could harm the broader economy and force environmentally friendly steelmakers to shut down.
The group calls for a more balanced approach to addressing the steel market oversupply.
"It is time for the government to adopt a forward-looking strategy that protects all players in the sector, fosters a competitive and greener steel industry, and aligns with global trends. South Africa cannot afford to prioritize a single company at the expense of jobs, sustainability, and a vibrant steel market."
The group looks forward to engaging with the government to ensure that decisions are made in the best interests of the entire steel industry and the country.
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