The International Trade Administration Commission of South Africa (ITAC) has recommended an increase in the overall customs duty on rail imports from five percent to 10 percent ad valorem following an application by ArcelorMittal Rail and Structures (AMRAS), a division of ArcelorMittal South Africa (AMSA), which requested tariff support to a level linked to the World Trade Organization rate to improve capacity utilization at the Emalahleni rail manufacturing plant in Mpumalanga and strengthen the domestic steel value chain.
According to the ITAC report, AMRAS, which acquired and reactivated the Emalahleni plant in 2022, is the only known manufacturer of mainline rail products in the South African Customs Union region and the only manufacturer of such products in sub-Saharan Africa, while its plant currently has sufficient installed capacity to meet domestic demand, but continues to operate at significantly low levels amid rising production costs, weak capacity utilization and challenging steel cost conditions.
AMRAS said replacing imported rails with locally produced products would allow the company to achieve more sustainable production levels, reduce marginal costs of production and improve its overall competitiveness, while ITAC noted that rails are critical to transport infrastructure, rail networks, mining activities and industrial logistics, and that the majority of South Africa's rail imports currently originate from the European Union and the Far East.
The application was supported by Zak Steel, which argued that additional tariff protection would benefit local production, while rebate provisions could still be used for specialist rail products that are not produced domestically, and ITAC also pointed to the African Continental Free Trade Agreement as a potential opportunity for South African manufacturers to expand their role as suppliers of rail products throughout the continent.
Having reviewed the application and comments received, ITAC concluded that the requested tariff support would allow the domestic industry to better utilize its underutilized production capacity, achieve economies of scale and increase product output, while reducing marginal production costs, and therefore recommended raising the duty on rails from five percent
