NUMSA condemns ISCOR’S monopoly prices and takeover by LNM.

The National Union Of Metalworkers Of South Africa ( NUMSA ) strongly condemns steel giant Iscor’s intentions to increase the prices of steel by an average 6% effectively from next month. The price increase is unacceptable and flies in the face of the sectorial engagement with the union, where Iscor promised to reduce the steel price.

Painfully, as a results of import parity pricing (IPP) lSCOR is charging double the price of steel to the local companies and consequently stifles the local economy and destroys jobs in the entire metal and mining industries. The IPP prevents entry of new companies in the downstream sector of the engineering, thus preventing the creation of new jobs in the local economy. Employment at the company remains precarious in nature.

The price hikes will also undermine the potential for further beneficiation and fabrication downstream. Iscor in this regard, is causing harm in the broader economy of South Africa . As a result the South African gas cylinder and barbeque manufacturer Cadac has closed all operations in South Africa . Many companies would not afford to purchase steel products at a high-denominated dollar price.

The acquisition by LNM holdings of 49.9% of Iscor capital, which is to be increased by 5,8% if the Competitions Commission gives it a nod will add to the woes of the steel industry. LNM would become the majority shareholder. Few groups and families producing in the region of 100 tons could dominate the world markets. Currently Arcelor and LNM, the world largest steel makers already produce in excess of 40 million tons and have stated acquisition plans. With a steel output of about 7 million tons and a global market share of less than 1 percent, Iscor is really in danger. It is imperative to note that the acquisition of this nature will lead to rationalisation and intra-firm pricing of steel and the ultimate closure of the Iscor company. There will be more centralisation and monopoly, consequently undermining the local content. Sadly, procurement will be externalised forcing Iscor to use cheaper inputs in the production process. The whole takeover will stifle growth and development in the economy.

For more information contact Dumisa Ntuli @ 689-1700 or cell 0829737282