South Africa’s International Trade Administration Commission (ITAC) has recommended that the general customs duty on rail imports be increased 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 up to the World Trade Organization-bound rate in order to improve capacity utilization at its Emalahleni rail production facility in Mpumalanga and strengthen the domestic steel value chain.
According to ITAC’s report, AMRAS, which acquired and revived the Emalahleni facility in 2022, is the only known manufacturer of mainline rail products in the Southern African Customs Union region and the sole producer 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 conditions across the steel value chain.
AMRAS stated that replacing imported rails with locally manufactured products would enable the company to reach more sustainable operating levels, reduce the marginal cost of production and improve its overall competitiveness, while ITAC noted that rails are critical for transportation infrastructure, railway networks, mining operations and industrial logistics, and that most rail imports into South Africa 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 manufacturing, while rebate provisions could still be used for specialized 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 across the continent.
Having reviewed the application and the comments received, ITAC concluded that the requested tariff support would allow the domestic industry to make better use of its underutilized production capacity, achieve economies of scale and increase output while lowering marginal production costs, and therefore recommended that the duty on rails be raised from five percent to 10 percent ad valorem.
The commission also recommended that the measure be reviewed three years after implementation in order to assess the performance of the domestic industry and determine whether the increased duty remains justified.