ArcelorMittal to shut South Africa long steel business
ArcelorMittal South Africa (AMSA) has decided to close its loss-making long steel business and halt production by the end of the month, threatening thousands of jobs.
The decision comes a year after the company first announced plans to place the operations into care and maintenance. This prompted engagements with the government wherein AMSA sought policy intervention to address structural issues affecting the business.
“Despite all efforts, unfortunately, the package of initiatives sought has not materialised to a level that will change the fundamentals of the structural problems the company has been experiencing in the Longs Business,” AMSA said in a statement.
“The board and management have no option but to take the difficult decision to proceed with the wind down of the Longs Business, which will be placed into care and maintenance.”
AMSA said jobs and enterprises, of varying sizes, supplying the affected works, will be negatively impacted, with up to 3,500 jobs affected.
“The wind down will impact all long steel plants, including the Newcastle Works, Vereeniging Works, and the rail and structures subsidiary, AMRAS. Newcastle’s coke-making operations will continue, though scaled back to reflect reduced demand,” the company said.
AMSA said the key factors informing its decision include deteriorating global and local steel markets, unaffordable energy and logistics costs, and surging low-cost steel imports, particularly from China.
Significant cost-cutting and cash management measures have also not helped to offset the deteriorating financial performance of the business. Furthermore, market conditions worsened into the final quarter of 2024, with global steel demand and prices under severe pressure which has detrimentally affected the financial performance of the entire AMSA business.
AMSA said revenue for 2024 is expected to be 5% lower compared to 2023, while it warned its headline earnings per share for 2024 will decline by as much as 159%.
Due to the wind down of the longs business and contemplated large-scale retrenchment, the company expects to cumulatively recognise asset impairment, wind down and severance charges of approximately ZAR2.7bn ($150m).