Talks between the government, trade unions and business leaders aimed at salvaging the country's steel industry appear to have made headway on Friday, with the government indicating it would move to rein in the damage caused by the flood of cheap Chinese steel imports. Industry sources said the government had little option but to introduce import tariffs and apply for extensive anti-dumping relief from Chinese exports. At stake is whether South Africa will continue to have a primary steel industry.story_article_left1The meeting brought together the National Union of Metalworkers of South Africa (Numsa), ArcelorMittal SA, Macsteel, Scaw Metals, Cape Gate and government ministers to thrash out a solution to the crisis, which is threatening tens of thousands of jobs.The talks were open and frank, Irvin Jim, the general secretary of Numsa, told Business Times. "We all seem to be understanding of the situation that South Africa and particularly the workers are facing. The issue now is urgency."The union is demanding an increase in tariffs, anti-dumping regulations, a ban on the export of scrap metal and a commitment that state-owned companies procure local steel.Former parliamentarian and industrial analyst Ben Turok welcomed the "steel talks", describing them as "critical" and "timely" and said they could set a trend for other sectors. "Steel is not the only sector in difficulty, the reality is that the relationship between companies and the government is not as cordial as we'd like."story_article_right2Turok said if South Africa was to maximise the use of its natural resources there had to be a degree of co-ordination between companies and the government. "For all the talk of beneficiation, we won't get anywhere unless there's proper co-ordination and ongoing discussions."Ironically, ArcelorMittal SA, owned by Indian billionaire Lakshmi Mittal, is demanding protection from a pricing strategy it forced on local steel users for the past decade. Since around 2005 the government has pleaded with the steel maker not to force steel consumers to pay the equivalent of what it would cost them to import steel and have it delivered to their factory gate.For five or more glorious years, as the rapidly growing Chinese economy soaked up as much steel as the world could throw at it, this import parity pricing generated hefty profits for the company.In 2007, in frustration at the steel maker's intransigence, the government removed all tariffs on steel imports and said it was looking at introducing a competitor.The recent slowdown in the Chinese economy has changed all of that.From the start of the millennium to its all-time high in June 2008, ArcelorMittal SA's shares soared 7000% or 80-fold. Since those lofty valuations, the share has crashed over 95%.story_article_left3China, the biggest producer of the metal, has been exporting huge volumes of steel in the past two years. The import parity price is now considerably lower than the price at which ArcelorMittal SA, which mills the bulk of SA's steel, can produce.Steel-producing countries across the globe - fellow Brics members included - charge that China is dumping product on them. Heavily subsidised costs of energy, finance and labour, and less onerous environmental strictures, give China an unfair advantage.The critical issue for the government is how to ensure the benefit of relief it secures for the steel makers is shared by customers and employees.The government has a particularly tricky record with ArcelorMittal SA dating back to its support for Mittal's acquisition of Iscor and the securing of a favourable iron ore supply deal with Anglo American subsidiary Kumba Iron Ore. The government believed it had secured an undertaking from ArcelorMittal that it would introduce a developmental pricing strategy. None was forthcoming.ArcelorMittal SA has dragged its heels on compliance with BEE codes and is only now looking at introducing an employee share ownership scheme and a BEE partner.One analyst described the share plan and proposed BEE deal as a last-minute effort to curry favour with the government, saying: "Hopefully the government will demand more than this for reining in Chinese imports."..