The International Trade Administration Commission of South Africa (Itac) has initiated an investigation into cement imports from Vietnam and Mozambique after finding prima facie evidence of dumping. The probe was prompted by an application from Afrisam and Dangote Cement, which alleged that imports were being sold at unfairly low prices, causing harm to domestic producers. Itac found that the dumping margin for cement from Mozambique and Vietnam is 90% and 37%, respectively.
According to Itac, Afrisam and Sephaku Cement, owned by Dangote, provided sufficient evidence to demonstrate that the material injury they have experienced can be linked to the alleged dumped imports. This is reflected in declines in market share, sales volumes, profit, and employment. The commission stated that the applicant submitted sufficient evidence to establish a prima facie case, enabling it to conclude that an investigation should be initiated.
The investigation comes as Mozambique is ramping up its Portland cement production capacity, with the government and Chinese partners investing $333m in two new plants and supporting infrastructure. This expansion has raised concerns among local producers, who have long pleaded for tariff measures to protect the domestic cement production sector against dumping from producers such as Pakistan.
The South African cement industry has been facing challenges due to high energy prices, making production costly. However, companies like PPC have continued to invest in expansion projects, such as a new R3bn cement plant in the Western Cape, designed to produce 1.5-million tonnes of cement annually. The industry has also raised concerns about substandard cement products flooding the market.
The proposed acquisition of Afrisam by West China Cement (WCC) has raised concerns about the potential impact on local production. PPC Africa CEO Matias Cardarelli has warned that the deal could see Afrisam downsize its production in South Africa and move production to Mozambique, where WCC has significant spare capacity. This could create strong incentives to abandon local manufacturing in favour of cheaper imported cement.
The National Regulator for Compulsory Specifications has found that some cement products on the market are failing to meet strength requirements. This has added to the challenges faced by local producers, who are seeking protection from dumped imports. The investigation by Itac is expected to provide relief to domestic producers, with steep tariffs on the cards for cement imports from Vietnam and Mozambique.
The outcome of the investigation is expected to have significant implications for the South African cement industry. If tariffs are imposed, it could level the playing field for local producers and help to protect jobs. However, it could also lead to higher prices for consumers and impact on the competitiveness of the industry. The investigation is ongoing, with Itac expected to make a final determination in due course.
Key points
- The International Trade Administration Commission of South Africa (Itac) has found dumping margins of up to 90% for cement imports from Mozambique and 37% from Vietnam.
- The investigation was prompted by an application from Afrisam and Dangote Cement, which alleged that imports were causing harm to domestic producers.
- The outcome of the investigation could have significant implications for the South African cement industry, with steep tariffs on the cards for cement imports from Vietnam and Mozambique.
