PPC, SA’s largest cement manufacturer, has called on the government to investigate “cement dumping” by countries such as Vietnam, saying if the practice is left unchecked, it will threaten the survival of the local industry.
In an interview with Business Times after the release of results for the year ended March 31, CEO Roland van Wijnen said it was also essential that the department of trade, industry & competition (DTIC) considered broad tariffs for imports of cement; at present these targeted specific countries and were not implemented across the board.
This was a problem because as one country was slapped with tariffs to prevent dumping — a recent example was Pakistan — another country emerged as a dumping culprit due to oversupply in their own markets.
This completely undercut the level at which local manufacturers could produce cement at a profit.
“There will always be a country that will have a surplus of cement available. This targeting of one country [with tariffs] does not really help. We need to come with a solution that stops this movement broadly from one country to another of surplus cheap cement.”
Van Wijnen said that PPC, which was established in 1892, “will not be in business for the next 130 years if this is not addressed”.
In its results on Sens, the group said cement and clinker imports, mainly from Vietnam, had increased 19% year on year and exceeded pre-Covid levels.
It estimated that the imports account for about 10% of cement sales in SA and said the group and the wider industry “continue to engage with the relevant authorities for relief against unfair competition from the imports”.
Van Wijnen said PPC had been having regular engagements with the DTIC for a long time but had not been able to persuade the government to launch an investigation “that allows them to see this is dumping”.
He said while the government’s argument would be that “we are living in a free world and you’re just wanting protection because you want an easy life”, this was not the case.
“This is about protecting employment in the country and helping SA to have a manufacturing base.”
This is about protecting employment in the country and helping SA to have a manufacturing base
— PPC CEO Roland van Wijnen
Van Wijnen said the 10% of dumped cement was equivalent to the output from one typical local cement factory. He said while a few hundred people would be employed directly in a cement factory because PPC’s procurement was all local, if transport and other logistics factors were taken into account, it cost “thousands of jobs in the entire supply chain”.
He said PPC wanted the government to investigate cement imports so that it “can confirm this is dumping”.
“All free-trade agreements have clauses in them to enable countries to protect themselves from dumping. For me, there is no question that this is dumping.”
He said shipping to the African coast, including SA, was inexpensive with lots of commodities going to Asia from Africa.
Brendon Hubbard, portfolio manager at ClucasGray, agreed that the movement of commodities such as coal to India, Pakistan, Vietnam and other parts of Southeast Asia facilitated cement dumping in SA.
What makes matters worse, said Hubbard, was that these other countries paid their cement manufacturers to export material because the production created jobs.
But, he said, South African cement producers were at a disadvantage because SA did not subsidise them to export to other markets and these other countries have strict tariff structures across the board to protect their domestic markets.
“We have zero chance of exporting SA cement into those countries without restrictions,” said Hubbard.
The DTIC said it “continues to endeavour to work timeously to focus on bringing practical solutions to challenges that are faced by local industries and to provide support through other industrial policy tools when and where necessary”.
As far as imports from Vietnam were concerned, the department said that in 2020 the cement industry had “initiated an application for anti-dumping of Portland cement originating from Vietnam” with the International Trade Administration Commission of SA (Itac), which is concerned, among other things, with trade remedies.
The DTIC said Itac had requested industry players to provide further information, but they had yet to submit the information requested “for the application against Vietnam to continue”.
As far as cement imports from Pakistan were concerned, it said minister Ebrahim Patel had approved recommendations in May that effectively extended the period for tariffs against Pakistan, saying this was “done on the basis that it will curb the recurrence of dumping of cement at cheaper prices”.
The department said the government had supported the local industry by declaring only locally produced cement would be used in state projects.
