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Interdepartmental task team to negotiate on iron ore and steel prices

Thu, 25 Nov 2010 15:45

An inter-departmental task team on iron ore and steel is to hold negotiations with players in the industry around the price of steel in South Africa, says Cabinet.

Briefing the media, Deputy CEO of the Government Communication and Information System, Vusi Mona, said the objective of the negotiations were to provide cost plus 3 percent access to the 21.4 percent Sishen Mining rights to Arcelor Mittal South Africa or other steel producers.

“This is conditional upon a developmental pricing model – determined by Government – that will result in domestic prices of steel being no higher than the lowest quartile of global prices,” said Mona.

The task team includes members from the departments of Trade and Industry (dti), Mineral Resources and Economic Development.

Mona said the team will draw upon a suite of policy instruments which have been presented to Cabinet.

“These include but not limited to relevant sections of the Minerals Petroleum Resource Development Act; strengthening the Competition Act; amending shareholder compacts with State-Owned Enterprises and promoting new steel investments together with the prioritisation of electricity availability and connections to such investments,” said Mona.

In August, the dti expressed concern about the high price of steel in the country, saying it was among one of the highest in the world, even prior to the introduction of the iron ore surcharge that came as a consequence of the private interim iron ore pricing agreement between Kumba Iron Ore and Arcelor Mittal SA.

The two companies agreed that the iron ore surcharge would be removed but replaced by an increase in the base price of steel. The increase in the base price will pass through the cost of iron ore to steel purchasers. BuaNews