ArcelorMittal SA: Steel Industry Capture, within the context of State Capture

STEEL INDUSTRY CAPTURE

within the context of

STATE CAPTURE

Pre-2015 dti Minister Rob Davies was a staunch critic of AMSA (ArcellorMittal SA), to such an extent that he removed the 5 percent duty that was in place at the time. That was done in retaliation of AMSA’s policy of import parity pricing and AMSA’s repatriation of billions of profits out of the country. “So, we will continue to pursue tariff reduction in mature industries, such as steel, that produce high value goods for downstream industries”, Minister Davies said at that juncture.

In 2015 everything changed: a Black Empowerment deal was concluded involving AMSA and well known individuals, 10 percent custom duties were introduced and 12 percent safeguard duties followed in 2017. Significantly also, Minister Davies’ view on duties made an about turn; all of a sudden his view was that South Africa had ‘no choice’ but to impose customs and safeguard tariffs on imports of certain steel products to protect the local industry. With ‘local industry’ he must have meant AMSA, because everything and everybody below AMSA was prejudiced by these duties.

What perhaps is also of significance in this regard was the meeting, prior to the above-mentioned events, between then President Zuma and Lakshmi Mittal (the owner of ArcelorMittal International) and AMSA, also in 2015. There is a strong perception in steel industry circles that this meeting set in motion the process aimed at protecting AMSA, by means of customs- and safeguard duties, which severely prejudiced the Steel Downstream.

Manufacturing in South Africa, in particular steel manufacturing, at least partially as a result of these duties, is experiencing business closures and severe job losses – something South Africa cannot afford. South Africans consequently need to know:

• who was present during the meeting between President Zuma and Lakshmi Mittal?
• in particular, was Minister Davies present?
• what was discussed, specifically with regard to the Steel Industry?
• is there a record of that meeting? and
• what undertakings were given, and in exchange for what?

In an article published in Businesslive on 1 November 2018, Peter Bruce (former editor of Business Day and the Financial Mail) suggested that Minister Davies must come clean at the Zondo Inquiry about his interactions with the Guptas. Minister Davies reportedly has indicated that he is ready to testify at the Commission.

Thus, while Minister Davies is at the Commission, we request Paul Pretorius, the Commission’s evidence leader, to interrogate him about the meeting between President Zuma and mr Lakshmi Mittal, a meeting which may have changed the course of South Africa’s Steel Industry, perhaps forever – made it uncompetitive, sped up de-industrialisation, caused business closures and job losses on a large scale – thus putting South Africa at risk.

The South African Steel Downstream pays a huge price to keep the monopolistic AMSA alive. Now the Steel Downstream (and South Africa) demand answers.

Previous NEASA communiques on this topic:

• 7 August 2018 – Steel Downstream sacrificed for the sake of AMSA
• 15 August 2018 – AMSA and safeguard duties: a slap in the face of the Steel Downstream
• 22 August 2018 – Open letter response by Minister Davies: No ‘safeguarding’ conspiracy between government and ArcellorMittal
• 28 August 2018 – AMSA: To the contrary Minister Davies

Kind Regards

Privileged and challenged to be South African.
We are all in this together.