The South African government is mulling over the question of whether to implement export taxes on iron ore and steel products.

This announcement by the cabinet comes as the state has been at loggerheads with the industry over supplying iron and steel products to the local market at more affordable rates instead of only exporting it.

The report by the inter-departmental task team led by the Department of Trade and Industry has said: “It is of significant national importance that SA leverages a competitive advantage from its resource endowment by ensuring that strategic minerals are made available at developmental prices to value-adding sectors.”

“Steel is the single biggest intermediate input into downstream manufacturing and should represent for SA a competitive advantage and not, as is the case at present, a disadvantage. A developmental steel price is also a significant lever to attract foreign direct investment into strategic manufacturing sectors of the economy.”

The report’s recommendations include:
• Deployment and amendment of relevant sections of the Mineral and Petroleum Resources Development act (MPRDA)
• Amendments to the Competition Act
• Amendments to shareholder compacts with (state owned entities)
• Introduction of export taxes on iron ore and steel, where appropriate
• The promotion of new steel investments and prioritisation of electricity available and connections to such investment

The potential introduction of export taxes may come as unwelcome news for the country’s largest suppliers of iron-ore and steel – Kumba Iron Ore and ArcelorMittal South Africa.

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