THE government has moved to protect the steel industry with a 10% ad valorem import duty on galvanised aluminium-zinc and colour-coated steel.

The duty, which went from 0% to 10% and received the green light on Friday, will come as a relief to applicants ArcelorMittal SA and Safal Steel.

The firms have bemoaned a loss of market share and an influx in competing product from China. The South African Coil Coaters Association made the submission on the companies’ behalf in December.

Downstream operators including Steel Source Africa, Macsteel SA, Steel Invest and Trellidor opposed the application, warning of job losses.

Manufacturers and traders decried the dearth of locally produced coated steel products, as well as its erratic availability and suspect quality.

ArcelorMittal SA and Safal Steel’s tariff application is the first of many being made by the local steel industry to shield the sector from cheaper imported products. Hulamin has undertaken a similar process for the aluminium sector.

This month ArcelorMittal asked the International Trade Administration Commission for maximum duty protection on all its products. This will be followed up by selected applications for trade remedies, including antidumping duties, countervailing duties and, possibly, even safeguard measures.

Last month the government, labour and industry convened an urgent meeting to discuss the threats to the steel industry’s unprecedented crisis.

The success of SA’s steel industry is inextricably linked with the ambitions of the state to reindustrialise the economy to create growth and jobs.

At the meeting, Trade and Industry Minister Rob Davies undertook to protect the industry with tariff hikes. In return, the steel companies cannot increase prices, must halt retrenchments on affected steel lines for the next three years and invest in capital equipment.

The industry also wants assurance the state will ensure locally produced steel is used in government programmes.

The steel industry and the state will work together to develop a pricing model that will ensure the government is able to get the steel it needs for infrastructure development, a central pillar of its grand aspirations to reindustrialise the economy.

In its report recommending a hike, the commission said it took into account the erosion of market share, fall in production, a drop in capacity utilisation of domestic manufacturers, and the “significant price disadvantages” to the industry from East Asian producers.

The commission will establish a committee of a cross-section of experts to monitor the effect of the change in tariffs on downstream users, and the performance of the applicants against the commitments they have made, the report said.