Industry body stresses need for import protection

The construction industry body Cement & Concrete South Africa (CCSA) is working with the government to legislate anti-dumping import tariffs and the protection of local cement materials and products.

“We have the capacity to produce around 22 million tonnes of cement per year, and we only produce around 13 million tonnes, due to demand, so there is significant spare capacity available.

“This is where imports of cement and other construction materials become a challenge. There are approximately one and a half million tonnes of cement imports into South Africa, and this is hurting the industry,” says the CEO of CCSA. Bryan Perrie.

This creates an “unfair playing field” for local cement suppliers, as importers do not have to face the same challenges – such as paying carbon taxes, rising energy prices and compliance with local labor and processing requirements – only local suppliers.

As a result, these imports often cost up to 40% less than many local products, he adds.

“We applied for a few initiatives. We first applied for anti-dumping duties in 2015 on cement from Pakistan, and the duty rates vary between 15% and 70%. However, they were valid for five years, so in 2019 we requested a sunset review of the tariffs.

Perrie says the government typically takes up to 18 months to complete the investigation needed for this review, as the government had to decide whether or not to keep anti-import tariffs by the end of May.

“The second initiative is a general import tariff on all imports of cement products. The challenge is that the World Trade Organization (WTO) says cement is a product that we cannot automatically impose tariffs on if you are a WTO signatory.

To claim this import tariff, an investigation is required to prove that the imports are harming a local industry. If successful, the necessary tariffs would be granted for a relatively short period to allow the industry to become competitive again.

Perrie points out that several factors make it difficult to conduct this investigation, including collecting highly sensitive information needed for the investigation, such as profitability, number of employees and salaries.

Additionally, due to anti-competition laws, this information cannot be collected by a single entity and must be collected through an independent law firm.

The cement companies that are required to submit this information also have different year ends, which may result in inconsistent data being provided.

“It lengthened the process. We submitted this information several times and received a deficiency letter stating that more information is needed. We are now processing another deficiency letter to provide more information”.

The third initiative that the CCSA has requested – through the Department of Trade, Industry and Competition (DTIC) – is for the government to designate any specific product in the local market.

If cement is designated, then for any publicly funded infrastructure project – whether at national, provincial or municipal level or through a public company – locally manufactured cement from raw materials from local origin must be used.

The Preferential Purchasing Act of 2017 was declared unconstitutional on February 16 this year, which Perrie said halted efforts to designate locally made cement.

Since then, the DTIC has published a draft regulation, which does not contain any localization mechanism such as the designation of locally produced cement products, he adds.

The CCSA has subsequently submitted its comments on this draft regulation, stressing the importance of designating locally manufactured cement, and is awaiting a response from the government.

“The cement industry is a big employer in South Africa. Many cement factories are in remote locations, and an entire community may depend on this factory, as it is the only industrial activity in the area. If the industry suffers and these factories close, it can have a serious impact on these communities,” he explains.

CCSA Consolidation

The CCSA was established last year through a process of engagement with various stakeholders to consolidate the Concrete Institute, the Concrete Society of Southern Africa and the Cementitious Materials Producers Association.

Perrie says CCSA has been mandated to promote and support the local cement and concrete industry, and to drive growth and deliver shared value through a unified cement and concrete platform.

CCSA will create long-term shared value and industry growth in South Africa by driving collaboration, skills development and innovation, and the highest standards in sustainable cement and materials and products in concrete.

“The benefit so far has been that CCSA has become a one-stop-shop for cement and concrete materials and products. There used to be a lot of confusion about the different organizations, especially where we interacted with the government on cement and concrete issues.

“It is now clearer that announcements from the cement and concrete industry will come from a single industry body,” he concludes.

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