The SA metal industry faces existential crises across several fronts

Daily Maverick

07-07-2025

The domestic steel dispute takes a new turn as the Government Gazette reveals punitive 52% duties that could reshape South Africa's industrial landscape. Oh, and we're running out of scrap metal.
Gerhard Papenfus, the CEO of the National Employers' Association of South Africa (Neasa), has perfected the sweet science of switching styles between lobbying Washington officials about farm murders and Black Economic Empowerment policies, and throwing legal power punches at government trade bureaucrats over what he calls an assault on the steel industry.
It's a shifting stance that perfectly captures the contradictions of South Africa's current economic moment: lobbying foreign governments for business-friendly policies while simultaneously battling your own government's trade interventions at home.
Papenfus recently returned from the US, saying that the stateside officials believe the South African government is 'not listening' and 'playing games'. It's a diplomatic dance that speaks to the growing international wariness about South Africa's economic trajectory.
Taking on Itac
In April, Neasa opened its fight against the International Trade Administration Commission of South Africa (Itac), threatening urgent legal action if the trade body proceeded with what Papenfus calls 'the largest tariff, duty, and import measures review in Itac's 22-year history'.
In his opening volley, Papenfus called out the 609 tariff codes across more than four chapters, covering everything from primary steel and stainless steel to steel pipes, wire, tools, cutlery and even padlocks.
'No meaningful representations can be made by any affected stakeholder,' Papenfus argued, highlighting the review's vagueness.
'No informed, substantive or tangible technical representations could be made without more information regarding the precise interventions planned, as no percentages, quota numbers, permit requirements, surveillance rules and regulations, standards specifications or rebate details are provided.'
Not entirely missing the mark
Okay, he had a point; Itac typically takes 27 months per singular review covering only a small number of tariff codes, with some reviews dragging on for more than 50 months. Yet the Minister of Trade, Industry and Competition has set what he (Papenfus) rightly calls an 'impossible turnaround timeframe' of June 2025 for this mammoth undertaking.
'How it plans on performing this earth-shattering number of reviews' is the question that has Neasa and industry players scratching their heads.
While Itac's review process unfolds, the government has already shown its hand with provisional safeguard duties that landed in a recent Government Gazette.
The 52% counterpunch
The numbers are crazy: a 52.34% provisional payment on specific flat-rolled steel products, imposed until 13 January 2026.
The targeted products include aluminium-zinc alloy coated steel of various thicknesses, with an extensive list of countries excluded from the duties.
Notably absent from the exemption list are major steel-producing nations such as China, though the Gazette's exclusions cover everyone from Albania to Zimbabwe.
This isn't just trade policy; it's industrial warfare.
The 52% duty in effect prices out imports, creating a deep moat around domestic steel production. But protection comes at a cost, and that cost is ultimately borne by downstream industries and consumers.
Scrap metal headache
Adding another layer of complexity is a growing dependence on ferrous scrap metal for green steel production. Government implemented the Price Preference System in September 2013 and an export tax in August 2021 to preserve this finite resource for domestic use.
Amit Saini, a director at electric steel-producing mini mill Coega Steels, sketches the scenario: South Africa 'cannot afford to toy with the existing policies that are already 'only just' managing to preserve scrap stocks'.
Why? Because the secondary steel manufacturing sector has an installed production capacity of 2.5 million to 2.8 million tonnes annually, requiring 2.7 million to 3 million tonnes of ferrous scrap.
With new electrified mini mills coming online in Nigel and Durban, demand is projected to soar to 4 million tonnes by 2026.
Saini warns that 'tinkering with the current regulations would put thousands of jobs at risk', a statement recognising that the country's 13 facilities currently employ more than 5,000 workers.
The fix is radical: 'an outright ban on the export of ferrous scrap'.
What this means for you
Steel will cost more: The 52% duties mean higher prices for imported steel – and those costs will trickle down to products such as cars, appliances, construction materials and even cutlery.
Local industries could feel squeezed: While steelmakers might celebrate, downstream manufacturers (which need affordable steel) could face higher input costs and job pressures.
Scrap metal stays home: Expect tighter scrap metal controls to keep supply for local 'green steel' production. That's good for the environment, but risky for scrap exporters.
Jobs on the line: Thousands of jobs depend on a delicate balance. Changes to scrap export rules or runaway steel costs could push some factories to the brink.
SA looks more protectionist: Heavy tariffs and export bans signal a more closed-off trade stance, which could affect foreign investment and global competitiveness.
Staying on trend
The global context supports this approach. The European Union will ban ferrous scrap exports by 27 countries from May 2027, and the GMK Centre predicts that 'scrap prices will be regulated through trade restrictions' in local markets as worldwide sea-borne trade volumes decrease.
What emerges from this industrial policy maze is a picture of a government struggling to balance competing priorities. Protect domestic steel production through punitive tariffs, preserve scrap metal for green steel initiatives and somehow maintain competitiveness in global markets.
Papenfus frames Itac's review as 'a concerted effort to search every nook and cranny of the steel industry framework to find possible ways of suffocating it through regulatory red tape and additional charges'. It's a view that reflects broader business frustrations with government intervention.
Yet the alternative – allowing cheap imports to flood the market while critical scrap metal resources are exported – carries its own risks. As Saini warns, 'deindustrialisation is a real possibility' if current policies are abandoned.
In the trenches
The steel wars represent more than industry disputes; they're a microcosm of South Africa's broader economic challenges.
For now, Papenfus and his industry allies are preparing for a legal battle, armed with complaints about process, timelines and the sheer scale of Itac's ambitions. Whether they can halt the regulatory juggernaut remains to be seen.
It's a fight with no easy victory, only costly compromises and the constant threat of unintended consequences. The 52% duties may protect domestic producers today, but they also signal a country increasingly willing to wall itself off from global markets. DM