South African Cement Producers Apply For Protection Against Imports

South African Cement Producers Apply For Protection Against Imports

The Concrete Institute (TCI) has on behalf of the South African cement producers applied to the International Trade Administration Commission (ITAC) of South Africa to investigate the surge of imports of low-priced cement.

TCI has lodged the application on behalf of AfriSam, Dangote Cement SA, Lafarge Industries South Africa, Natal Portland Cement Company, and PPC.

Bryan Perrie, TCI Managing Director, says imported cement is undercutting the industry by at least 45%. When this is combined with unprecedented low levels of demand due to slowed economic growth, the industry is facing a survival crisis which threatens to undermine the industrial capacity of the country. “The cement industry has no option but to request ITAC to conduct a safeguard investigation to determine whether the cement industry requires protection from the surge in imports,” he states.

Bryan Perrie, MD of The Concrete Institute

Perrie says South Africa has become a net importer of cement with total imports increasing by 139% since 2016 which makes trade remedy protection vital to ensure the viability of the cement industry. “Local producers have the capacity to meet the Southern African Customs Union’s industrial demand and must protect employment, Broad Based Black Economic Empowerment (B-BEEE) investments and Environmental Social and Governance (ESG) requirements. The SA cement industry needs to compete on a level playing field and not against a surge of low-priced imports,” Perrie asserts.

The South African cement industry is very competitive. The cement, concrete and affiliated industries employ thousands of South Africans whose jobs would be on the line if local cement production is not protected. Importantly, several producers have significant B-BBEE investments that are at stake.”

In addition to the surge in low-priced imports, a “carbon tax” was introduced in June 2019 on the South African cement industry’s activities that has increased the industry’s production cost. The effect of this tax translates into a 2% increase in selling prices, putting the local cement industry at a further disadvantage against imports. 

Local pricing reflects the standards (technical, social and environmental) that have been determined by South Africa as necessary for local manufacturing. SA cement manufacturing processes are regulated, from environmental impact assessments to strict quality controls, and from labour and employment regulations to sustainability requirements and South Africa is a signatory of the Paris Accord on CO2 emissions.

In support of the application, TCI has outlined that:  

  • A total of 350 441 tons of cement arrived in RSA during the second quarter of 2019 – the most since the third quarter of 2015; 

  • Most of the cement landed at Durban. The 260 909 tons that arrived there is an 85% increase on the first quarter of this year;

  • Imports from Vietnam totalled 301 872 tons;

  • Imports have exceeded exports by over 50 000 tons during the past year;

  • Total imports increased by 139% since 2016;

  • Employment in the industry increased by less than 0.5%; and

  • South Africa represents roughly 1% of total exports from Vietnam, for example, where exports have increased by 50% in the first half of 2018 to 15 million tons according to information provided by Global Cement. 

Perrie feels the South African economy is at a crossroad where trade policy determinations will play a critical role in determining the industrial direction of the country. “The key to future growth lies in achieving greater efficiencies within the country’s relevant manufacturing sectors. The cement industry must compete on a level playing field and not be scrambling to survive against low priced imports. The sector needs space to grow, which a successful ITAC application would provide,” he states.

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