Steel industry: the 'nuts and bolts' of the duty disaster

Steel industry: the 'nuts and bolts' of the duty disaster

by Gerhard Papenfus

The domino-effect of Government’s disastrous intervention in the steel industry (by the introduction of duty-protection for manufacturers), is once again illustrated in the fastener-industry (nuts, bolts, screws, threaded rod, etc.).

There is an upcoming public hearing scheduled for Tuesday, 16 February 2021, following which Government will decide whether to introduce a further 31.08% duty on a significant portion of the market (carbon steel bolts).

These products are already subject to a 30% duty. Should this further duty be implemented, the total duty payable will increase to 61.08%. All imports of industrial fasteners, from various developed countries in the Far East, are already subject to a 75% duty on set screws and 84% on threaded rods and nuts, which is part of the product-mix of the fastener industry.

Over time, the manufacturing of nuts and bolts diminished and since the raw material (rod, etc.) is, among others, produced by AMSA, the demise was aggravated when Government introduced duties to protect AMSA. There are only a few local manufacturers left in South Africa that turned to Government to protect them against the importation of the finished product which, as mentioned, is subjected to duties of up to 80%.

The dilemma, however, is that the fasteners, which enjoy the benefit of the duties, are unable to supply the ‘nuts and bolts’ market, which resulted in these businesses, and the South African economy, being unable to participate in the mega projects in sub-Saharan Africa, for example, the $20 billion Liquid Natural Gas development in Mozambique. All this business has gone to foreign companies who are able to supply at competitive prices.

For the industry to recover, it will have to start importing again. However, the lost market-share will not be regained if they cannot supply competitively. The solution, therefore, lies in the abolishing of all duties and opening the door for competitive pricing at all levels of the steel downstream.

Gerhard Papenfus is the Chief Executive of the National Employers' Association of South Africa (NEASA)