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Johannesburg - Government is intent on using policy tools to achieve competitive steel pricing to benefit downstream industries, Trade and Industry Minister Rob Davies said on Thursday.
"Our research, our analysis now is telling us there were obligations and we are going to ensure that those obligations are
fulfilled. That is basically what we are looking at in our task force - identify(ing) the possible options."
The minister, who spoke on the sidelines of a press briefing that saw renewed calls from MPs for regulation, declined to say
what form of intervention the state would choose.
He said an interministerial task team has found that developmental goals for the steel industry were fundamentally
undermined by enshrining them in contracts with Kumba Iron Ore and ArcelorMittal.
The weakness has been highlighted by the ongoing dispute between the two protagonists, which is now subject to arbitration.
"We believe that the unbundling of Yskor in 2001... embedded two very important developmental objectives, and the first one was that a proportion of all ore which is mined at Sishen is made available at cost plus 3% to support competitive steel manufacturing in South Africa.
"And the second one was that the beneficiary... would be required to pass that on in the form of a competitive steel price
for downstream industries that use steel.
"The weakness that has probably emerged is that those obligations were entrenched in contracts between two discrete companies and those contracts then became the subject of dispute."
The task team - a group of officials from trade and industry, economic development and mining - was looking at how government
could "reinstate those developmental obligations".
"I am not prepared to say what we are going to do, what leverage we are going to deploy, but as I said we are going to identify the levers that we have to ensure that we get the public and developmental objectives on a higher ground," the minister said.
His remarks came after Louise Fubbs, the chairperson of parliament's portfolio committee on trade and industry, announced she would call public hearings to "interrogate" ArcelorMittal and other industry players on the impact of steel prices.
Fubbs said she was not expected to wait for the final recommendations of the task team, as the situation was too dire.
"We take it so seriously, this matter of irresponsible pricing without justification, that we are now going to .... interrogate this in such a manner that industrialists, manufacturers who are feeling in industry and manufacturing the impact of this, will come and comment.
"We cannot wait as it were for the completion of the work of that task team. Good heavens, what will they get up to next? We
have to arrest them in their tracks as they were.
"They are making their millions without beneficiation at all," she said.
DTI deputy director general Nimrod Zalk has said that ArcelorMittal had failed to pass on the benefits of the low-priced steel it received from Kumba Iron Ore to downstream industries, and it was clear that "moral persuasion" was not enough to change the situation.
Fubbs said the committee was prepared to consider introducing legislation to force the main players in the industry to adhere to a developmental steel price.
She said the fact that ArcelorMittal was a multinational company posed no obstacle to doing so.
MPs have in recent weeks sharply criticised the department for allowing ArcelorMittal for the past six years to get away with
prices that failed to meet the agreed developmental model.
"Our research, our analysis now is telling us there were obligations and we are going to ensure that those obligations are
fulfilled. That is basically what we are looking at in our task force - identify(ing) the possible options."
The minister, who spoke on the sidelines of a press briefing that saw renewed calls from MPs for regulation, declined to say
what form of intervention the state would choose.
He said an interministerial task team has found that developmental goals for the steel industry were fundamentally
undermined by enshrining them in contracts with Kumba Iron Ore and ArcelorMittal.
The weakness has been highlighted by the ongoing dispute between the two protagonists, which is now subject to arbitration.
"We believe that the unbundling of Yskor in 2001... embedded two very important developmental objectives, and the first one was that a proportion of all ore which is mined at Sishen is made available at cost plus 3% to support competitive steel manufacturing in South Africa.
"And the second one was that the beneficiary... would be required to pass that on in the form of a competitive steel price
for downstream industries that use steel.
"The weakness that has probably emerged is that those obligations were entrenched in contracts between two discrete companies and those contracts then became the subject of dispute."
The task team - a group of officials from trade and industry, economic development and mining - was looking at how government
could "reinstate those developmental obligations".
"I am not prepared to say what we are going to do, what leverage we are going to deploy, but as I said we are going to identify the levers that we have to ensure that we get the public and developmental objectives on a higher ground," the minister said.
His remarks came after Louise Fubbs, the chairperson of parliament's portfolio committee on trade and industry, announced she would call public hearings to "interrogate" ArcelorMittal and other industry players on the impact of steel prices.
Fubbs said she was not expected to wait for the final recommendations of the task team, as the situation was too dire.
"We take it so seriously, this matter of irresponsible pricing without justification, that we are now going to .... interrogate this in such a manner that industrialists, manufacturers who are feeling in industry and manufacturing the impact of this, will come and comment.
"We cannot wait as it were for the completion of the work of that task team. Good heavens, what will they get up to next? We
have to arrest them in their tracks as they were.
"They are making their millions without beneficiation at all," she said.
DTI deputy director general Nimrod Zalk has said that ArcelorMittal had failed to pass on the benefits of the low-priced steel it received from Kumba Iron Ore to downstream industries, and it was clear that "moral persuasion" was not enough to change the situation.
Fubbs said the committee was prepared to consider introducing legislation to force the main players in the industry to adhere to a developmental steel price.
She said the fact that ArcelorMittal was a multinational company posed no obstacle to doing so.
MPs have in recent weeks sharply criticised the department for allowing ArcelorMittal for the past six years to get away with
prices that failed to meet the agreed developmental model.
