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As far as repayments on home loans are concerned, South Africans are in a much more favourable position than their foreign peers.
This is the view of Professor Simon Roberts, an economist at the Competition Commission.
Cape Town - Even if ArcelorMittal has to buy iron ore from Kumba Iron Ore at commercial prices, it is unlikely that it would really affect Mittal's competitiveness.
This is the view of Professor Simon Roberts, an economist at the Competition Commission.
On Tuesday he appeared before the Portfolio Committee for Trade & Industry in Cape Town to deliver a presentation on South Africa's latest Industrial Policy Action Plan (IPAP2).
On Monday Kumba began to supply ArcelorMittal with iron ore on commercial terms, which will dramatically increase the steelmaker's operating costs. Until now Kumba has been supplying Mittal with 6.25m tons a year at cost-plus-3%.
Various analysts have warned that cancellation of the contract could cause Mittal, the country's biggest steelmaker, to close its doors.
Roberts said, however, that Mittal has one of the world's lowest cost structures, with some of the highest profit margins.
He therefore believes that Mittal will remain competitive even if it loses the benefit of cheaper iron ore.
Roberts said that the high profits that Mittal has made over the years have removed profits from other manufacturers in the value chain.
This often leads to little investment in production capacity by domestic manufacturers in the steel industry.
Furthermore local prices are controlled by a complex system of discounts and conditions for specific clients.
Minister of Economic Development Ebrahim Patel on Tuesday told a media conference in Parliament that it was critical for the economy to make steel available at competitive prices.
This is also one of the objectives of the IPAP2, since steel is an important input in various industries on which the IPAP2 focus.
- Sake24.com
For more business news in Afrikaans, go to Sake24.com.