Anti-dumping boss a potential friendly face for monopoly producers

Industry Minister Ed Husic. Illustration: Sturt Krygsman

Industry Minister Ed Husic has gone for a safe pair of hands as his new anti-dumping chief, which suggests support for monopoly producers at the expense of downstream users and industry costs.

Nearly 11 months after Bradley Armstrong retired, Husic on Friday appointed Victorian public servant David Latina as his replacement to head the Anti-Dumping Commission.

Latina is deputy secretary for Victoria’s state industry department.

Dumping occurs when imports land in Australia at below the normal price in the country of origin and cause financial damage to the Australian producer.

The overwhelmingly dominant users of the system are steel monopolies Infrabuild (long products) and BlueScope (flat products) which account for 83 per cent of all cases before the ADC and 71 per cent of measures in place.

Other frequent users include SPC against imported Italian tomatoes, Crescent Capital’s Oceania Glass and aluminium producer Capral.

China is the target of most Australian complaints with 18 dumping and 11 countervailing duty measures outstanding, followed by South Korea at seven, Malaysia at six and Taiwan with six.

Productivity Commission deputy Alex Robson has urged “progressively removing Australia’s anti-dumping and countervailing measures and subject any new measures to an economy-wide and cost-benefit test”.

This won’t happen under Husic – and Latina, on paper, looks to be a status quo appointment.

Like any protection debate the beneficiaries tend to be voluble participants in highly concentrated sectors and the losers disparate, often unaware of the costs involved.

Once an anti-dumping complaint is made, trade effectively freezes because importers don’t want to risk margins; which means the local industry free of competition is able to increase prices.

In 2023 the ACCC successfully sued BlueScope, attracting a $57.5m fine for attempted price fixing using dumping threats. The case is under appeal.

Latina replaces acting chief Isolde Lueckenhausen who held the reins for the 11 months it took to replace Armstrong.

Husic said in a statement: “Latina has a strong track record engaging with Australian manufacturing.

“Australian companies deserve a level playing field and David Latina’s experience and judgment will be crucial in safeguarding fair competition based on international rules.”

Latina said: “It’s important that Australian businesses can compete in a fair and competitive rules-based environment.”

“I am looking forward to continuing to work closely with Australia’s diverse manufacturing and importing businesses, including SMEs.”

Users urge a revamp of the administration starting with increased transparency, regular annual reviews of decisions to monitor market behaviour, consideration of the interaction with competition law and a requirement that industry responds to any duties applied with increased investment in their own operations.

The concern is inefficient companies with a poor investment track record are the major beneficiaries of the system.

Latina has one urgent matter to attend to and that is to cancel the nonsense anti-circumvention case applying to steel mesh from China.

Anti-circumvention investigation ordinarily occurs when like goods are slipped in to evade duty, but in this case the investigation applies to steel mesh used for concrete which is claimed to be like steel rod coils.

This is akin to saying chocolate cake is the same as wheat – and worse, the commission has extended its investigation right up to March next year.

As is it still an investigation, Latina can end the case himself without having to bother the minister, who is normally the ultimate decision maker.

Electrifying idea for Pilbara

This week’s landmark decision to proceed with a trial for low-carbon-emission steelmaking is as much about protecting the longevity of Pilbara iron ore as also offering BlueScope a route to low-carbon production.

The decision to test the electric smelting furnace production in Kwinana had a lot to do with a $75m WA government incentive as part of its industry transition policy, access to Woodside gas, the resources base and perhaps and imminent federal government anointing of Kwinana as a potential hydrogen hub.

Gas is the preferred supplier in the direct reduced iron process until alternatives like hydrogen are ready.

The Pilbara ore produced by BHP and Rio Tinto is below the quality needed for electric smelting and Brazilian based Vale is the only producer with the desired quality ore.

If technology can overcome the shortfall, BHP, Rio and arguably their users would be the beneficiaries.

The plant is subject to a 2026 final investment decision and has a potential 2028 start.

Further to last week’s note on electric arc furnace steel aimed at the reinforcing steel market, another competitor, Toowoomba-based GM steel, should be added to the list of producers.

GM’s Alan Morgan comes from a scrap metal base and looks set to be the first into production in early 2027 ahead of Azlan Ho’s Collie Steel and, bringing up the rear, Grant Johnston’s Westview.

Johnston is relaxed, noting that with his Bestbar distribution and Infrabuild the market is pretty well locked up leaving the other two scratching for a route to market.

All three will benefit if Sanjeev Gupta’s Whyalla mill fails to restart.

Liquor group’s unseasonal woes

This is peak season for Endeavour Group but the liquor company spun out from Woolworths four years ago is struggling, is looking for a new chief executive and new focus.

At $4.19 a share the stock is down 25 per cent from near-term highs of $5.55 in July, all-time highs of $8.40 in 2022 and has underperformed the market by 27 per cent this year.

Chair Ari Mervis’s apparent problems replacing Steve Donohue as chief are compounded by voluble 15 per cent shareholder Bruce Mathieson, who is quick to hit the megaphone when strategy and performance falls.

Sadly the latter is the norm.

The company says a new chief will be named in the first quarter of next year, with former Woolworths and Virgin CFO David Marr reportedly the only contender to be invited back for a second interview.

Other names in the mix include former Coles and SAB executive Thinus Keeve who is well known to the chair and former SAB Australia boss, Mervis, and former Dan Murphy’s boss Alex Freudmann.

Freudmann is now at Tesco in the UK and considered unlikely to want to return.

The company owns 1700 Dan Murphy’s stores, 354 pubs, six wineries and of course poker machines galore.

The latter are doing well, but pub meals are slow in the cost-of-living challenged economy, the wineries are seen as superfluous and should be sold, while Dan Murphy’s big-box format is being polluted by the present strategy of rolling out mini Dans.

A lame duck CEO and dysfunctional board in peak season is not ideal, but then the Christmas/New Year format runs to a well known schedule which any half seasoned executive could roll out.

It seems Donohue will present the half financial numbers and Endeavour shareholders can only hope a new chief and strategy will come in the near term – as promised for the past six months.