SA endorses iron ore, steel export levy report

[] – SOUTH Africa’s cabinet gave the thumbs up for a report compiled by an inter-departmental task team which looked into the competitiveness of steel and iron ore production and pricing.

The task team, comprising the departments of trade and industry, economic development and mineral resources, recommended among other things amendments to the Competition Act, the introduction of export taxes on iron and steel, and prioritising the availability of electricity and other infrastructure to steel and iron ore producers and manufacturers.

Briefing journalists after yesterday’s cabinet meeting, Collins Chabane, minister in the presidency responsible for performance monitoring and evaluation, said steel and iron ore have been identified as an important part of government’s beneficiation strategy for minerals to ensure South Africa’s mineral wealth is developed to its full potential and to the benefit of the entire country.

“We want to expand the number of participants in the steel producing industry to introduce new competition,’ he said. It includes measures to contain the prices of steel in order to stimulate the domestic production of various products which will be crucial to South Africa’s construction and infrastructure programmes.

ArcelorMittal SA (Amsa) declined to comment on the report: “Unfortunately, Amsa cannot comment at this stage because it would need to see the full report first,’ a spokesperson said for the group. Shares in Amsa were a little under one percent lower in JSE trade today, but had shed nearly 57% since January as steel prices fell.

“Kumba is aware of the statement made by the government spokesman with regard to proposals for export taxes on iron ore and steel,” a Kumba spokesperson said.
“At this stage, there are no further details available and it is difficult for us to comment without all the relevant information.

The inter-departmental task team on iron ore and steel was established in 2010 following the private interim iron ore pricing agreement between Kumba Iron Ore (Kumba) and Amsa.

The interim agreement followed a dispute between the two firms in which Kumba wanted to replace a long-standing cost plus 3% iron ore supply agreement with one based on market related prices.

Arbitration on a new iron ore supply agreement between Kumba and Amsa is pending an appeal over exploration rights over properties in the Northern Cape held by Kumba’s Sishen Iron Ore Company (Sioc) which was set today for February.

Trade and industry minister, Rob Davies, at the time was concerned about the fact that the increase in iron ore prices would be passed on to buyers of steel.

“We remain extremely concerned about the high price of steel in the South African economy, which was amongst the highest in the world prior to the introduction of the iron ore surcharge,’ Davies said at the time.

Chabane did not elaborate on government’s planned introduction of export taxes on iron ore and steel, but said the recommendations in the report will be implemented urgently.