00:00The decline of South Africa's steel industry hit a new low when ArcelorMetal announced it would
00:12close its loss-making steel division, putting at least 3,500 jobs at risk. The steelmaker posted
00:20a half-year headline loss of 1,014 billion rand, or $56.4 million, slightly narrower than a $63 million
00:31loss reportedly previously on persistently low sales volumes and low prices. A sector once seen
00:40as the backbone of industrial growth has been eroded by underinvestment and a decade-long energy crisis.
00:47We're talking a sector that has been contracting at a rate of about 1.4 percent on a compound basis
00:54over the last 15 to 20 years. That just gives you a sense of the multi-year and you could even say
01:01double decade pressure that the sector has been experiencing. We've also seen that during the
01:06same period I'm talking about between let's say 2008 and now, the sector has lost 213,000 jobs.
01:15A $160 million lifeline by government has failed to stem the steel giant's bleeding. As retrenchment
01:23letters go out, speculation grows over a possible buyout by the country's investment arm, the Industrial
01:31Development Corporation. But officials remain tight-lipped. Analysts, however, agree the industry
01:37is too critical to be allowed to collapse. Virtually every industry has a steel component ending up in
01:45there or facilitating that industry's infrastructure. Even up to what we call the growth industries like
01:54the renewable energy area or just the transmission development plan that the country is contemplating
02:00to build, which is the 14,000 kilometers of transmission capacity. All that will need steel on an aggressive
02:08basis. You want the steel to be available for local, you know, the rest of the companies down the value
02:15chain. And then for Africa again, you know, massive, massive importance in terms of building infrastructure
02:24on the rest of the continent. And we don't want to be dependent on Asia and on India for all of that.
02:30Adding to the industry's woes are looming climate-link taxes of up to 50 percent from the European Union part
02:38of its push to curb emissions and protect its own steel producers amid rising global trade tensions.
02:45The EU is the country's second largest export market after China. South Africa may be shielded by
02:53preferential trade terms, but the move could spark a global oversupply and destabilize local supply chains.
03:01South Africa is one of the most unprotected steel markets globally. If you look at tariffs and safeguards
03:07and everything that is in place, we're really open to the rest of the world to say,
03:12export your products here, you know, bring it in. And that is an enormous challenge for us.
03:19Pretoria plans to challenge the EU's proposal at the World Trade Organization. Analysts say the new
03:26EU measures, which also target Chinese and Indian steel producers, signals the rise of a new era in
03:33global trade defined by green protectionism, which threatens to undercut domestic industries and slow
03:41industrial growth in developing countries.
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