One hundred years ago the government of the Union of SA formulated its first industrial policies to help develop the then infant steel industry. This link between government support and SA’s primary steel industry has waxed and waned over the past century, but has never entirely disappeared. “Our government has proved sympathetic and far-seeing, introducing legislation for the protection and encouragement of the [steel] industry, in the form of a bounty [subsidy] system.
When the iron ore mines were sold they carried a condition that the ore would be sold to ArcelorMittal SA at cost plus 3%. I oversimplify, but Amsa had an option to renew this agreement after 10 years and forgot to exercise that option. The price cap disappeared, resulting in enormous price increases from Kumba. Off to court. Lose. Appeal. Lose. Constitutional Court. Lose.
The effect was astonishing. China became the world’s largest steel producer by 2011 and by 2020 it was producing half of the world's steel, more than the next four countries combined. The subsidisation and consequent over-production of steel by China had become so problematic that the WTO set up a committee on [steel] safeguards in 2018, specifically to look at this.
Then in 2017 there was a Lazarus-like moment when Amsa took it over and restarted production, with a R150m helping hand from the Industrial Development Corporation . This has always been a strange deal, because unlike when Highveld was running the plant Amsa was not making the steel on site. Instead, it had to truck the structural blooms from Newcastle, at significant cost.
In 2016, in a very South African fashion, a steel pricing committee was set up to “manage” steel prices, comprising government officials, Amsa and representatives of the downstream industry. This worked about as well as you would imagine.