ARCELORMITTAL South Africa Limited (AMSA), a subsidiary of steel magnate Lakshmi Mittal’s global operations, has announced plans to cease operations at its long steel plants.
The decision, which will affect over 3,500 jobs, comes after prolonged efforts to address challenges in the South African steel industry.
AMSA stated that the closure follows persistent weak economic conditions, ongoing energy and logistics constraints, and heightened competition from low-cost imports, primarily from China.
In November 2023, AMSA had placed its long steel business under care and maintenance while discussions were held to explore alternative solutions.
CEO Kobus Verster said, “As a company, we are disappointed that all our efforts over the last year have not translated into a sustainable solution. The issues tabled for resolution sought to level the playing field against international and local competitors.”
He noted that structural problems in the steel industry, both within the company and South Africa at large, were key barriers to sustainability. “We had hoped that matters would not have come to this conclusion, at a time when our country can ill-afford job losses and the further erosion of industrial capacity,” Verster added.
In response to concerns from stakeholders, including the government and labour unions, about job losses and socioeconomic impacts, AMSA worked on solutions throughout 2024. While the company did not request subsidies, it sought policy support to address structural constraints in the sector.
AMSA said its engagement with the government since December 2023 led to some progress, but not enough to sustain the long steel business.
“Initial signs of recovery in international steel prices, following announced Chinese stimulus measures, were short-lived. By year-end, the company faced no alternative but to proceed with the winding down of the Longs Business,” AMSA said.
Steel production is expected to cease by late January 2025, with the winding down of remaining operations completed within the first quarter of the year. Newcastle’s coke-making operations will continue at a reduced capacity.
The South African Iron and Steel Institute (SAISI) reported that the country’s crude steel production from January to November 2024 was 4.42 million tonnes, 2.3 per cent lower than the previous year. Production levels are now 30 per cent below 2018, with South Africa trailing Egypt and Algeria in steel output.
AMSA, which originated from the state-owned steelmaker Iscor, expressed confidence in restructuring its remaining operations to remain competitive and sustainable.
(With inputs from PTI)
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