TRALAC - Trade Law Centre

South African miner’s fate hangs on US decision

Monday, 14 July 2008

Source: Business Day

Manganese Metal Corporation (MMC), a Nelspruit-based subsidiary of BHP Billiton, is pinning its hopes on a US government exemption from import duties for electrolyte manganese metal powder , a key South African export , in a bid to retain its position in the US.

The firm, which supplies 19% of the US market, expected a decision in the first half of this year, but none came.

Securing duty-free status is critical for MMC . The US consumes as much as four-fifths of the product, used to add toughness and abrasion resistance to metal alloy products.

MMC has already had to reduce shipments to the US because of power cutbacks .

It is now also facing formidable competition in the US market from Chinese manufacturers, which produce a cheaper, but environmentally hazardous, product.

SA and China are the only suppliers to the US of manganese metal powder , currently subject to import duties of 14%.

MMC applied for duty-free status under the Generalised System of Preferences (GSP) , a programme designed to promote economic growth in the developing world. The programme was upgraded for Africa through the African Growth and Opportunity Act (Agoa) , which gives sub-Saharan countries, including SA, improved preferential access to US markets.

MMC’s petition for electrolytic manganese metal powder was the only petition from Africa under review for this round of considerations .

A decision was expected soon, said George Jungbluth of PBN Company, a public relations firm that represents MMC in Washington DC. “It is clear that without GSP status, MMC will have difficulty maintaining a presence in the US market,” Jungbluth said.

“This is a lose-lose scenario for SA and the US. For SA an important export market is lost and damage will be done to a company that provides several hundreds of quality jobs . The US will lose a reliable supplier and the only alternative to Chinese imports,” he said last week.

MMC’s product is more environmentally friendly than the Chinese product. It does not use selenium, an environmentally hazardous but less expensive means to produce the powder, developed in co-operation with the US Bureau of Mines.

However, the cost of production was higher than the Chinese product, largely because of the green technology that was used instead of selenium, Jungbluth said.

Ironically, the US is wholly dependent on imports, as no American firms produce the powder for commercial sale .

Manganese metal products were originally excluded from Agoa because of opposition from Kerr McGee, then a local producer . The company, however, ceased production of all electrolyte metal products in 2001 and does not oppose the exemption from duty.

Victor Mroczka of Hughes Hubbard Attorneys, Washington D.C., has updated us that the petition was denied.



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of South Africa’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.