South Africa's government will impose a 10 percent import tariff on steel imports to protect the struggling industry, with the possibility of hiking them further, an industry body said on Monday.
Cheap imports from China are hurting steel makers in South Africa, which currently does not have import duties on steel. As many as 200,000 jobs are at risk due to a global supply glut of the commodity, ArcelorMittal South Africa has warned.
"The first application for tariffs at 10 percent of the WTO bound rate will be signed off next week with conditions which are not yet finalised," Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said in a statement, without giving a firm date for a tariff hike.
The World Trade Organisation (WTO) allows countries to raise tariffs by up to 10 percent to protect local industries.
The government declined to comment, but said in a statement it was considering "various tariff applications".
Chief executives in the steel industry and labour unions also said the government in a meeting on Friday had committed to introducing a 10 percent tariff on imported steel to protect the industry.
One of the conditions for the tariff hike was that the steel industry could not raise the price of steel to "unaffordable levels", SEIFSA said in the statement, without giving details.
ArcelorMittal South Africa has warned it could close a plant that employs 1,200 people while smaller rival Evraz Highveld Steel and Vanadium has been placed in the hands of administrators.
"It is a crisis that I have never seen, it's unprecedented in my history in the steel industry," SEIFSA President Ufukile Khumalo told reporters.
ArcelorMittal Chief Executive Paul O'Flaherty told Reuters last week the firm was willing to cap its profit margin if the government imposed import duties on imported steel.
Jobs are a sensitive issue in South Africa, where unemployment is around 25 percent, and the government has urged the industry not to shed jobs.
In a statement, the trade and industry and the economic development departments urged steel companies to submit anti-dumping applications to South Africa's International Trade Administration Commission, which has the power to raise tariffs.
The government will have a follow-up meeting in about four weeks when companies have submitted their anti-dumping applications.