Comments by Trade and Industry Minister Rob Davies on the sidelines of a summit of Italian and South African CEOs on Friday suggest that such a win-win settlement to the longstanding standoff between the government and the steel industry is in the offing.
Progress in the talks is possibly the result of the steel industry being on its knees and in need of government support.
The sector faces plant closures and financial difficulties and has warned of thousands of job losses because of the flood of cheap imports and rising costs.
The industry already has protection against the deluge of Chinese imports in the form of a 10% tariff duty on certain products, and has applied for similar protection for all of its products. It could also qualify for a further 10% antidumping duty. Steel producer ArcelorMittal SA has applied to the International Trade Administration Commission (Itac) for such a duty.
Davies said the government would have to observe due process and could not make any decision without a recommendation from Itac, but he noted that some countries had imposed antidumping duties as high as 30%-40%.
Steel producers, he said, would have to establish the fact that dumping was taking place and demonstrate the difference between the nondumped and dumped price to support their application.
With regard to the discussions on a steel pricing policy, Davies said there had been a "lot of progress".
"There are two parts to it. One of them is linked to the tariffs and the other one is linked to the competition case. I will have to sit down with Patel (Economic Development Minister Ebrahim Patel) to evaluate the proposals coming up, but I can say that the dialogue on the steel pricing issue has been much better than it has been for a very long time," Davies said.
"The aim of the talks is to find a pricing regime that allows for affordable downstream steel. One of the conditions of the imposition of the 10% tariff duty was that ... producers cannot use this to raise the domestic price of steel. It was meant to shield them from the low price of imports, but they could not use it to raise the domestic price."
The government has long complained about the import parity pricing policy applied by local steel producers, which had the effect - when international steel prices were high - of raising the price of steel on the local market and undermining the local steel manufacturing industry.
Now that international prices are low, import parity pricing works against local producers.
Davies has in the past issued warnings and threats against the industry, with the government investigating the viability of a state-owned steel mill. He has said a discounted steel price is critical to the success of the government's beneficiation strategy, and necessary to kick-start industrial development.
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