ArcelorMittal South Africa (AMSA) will shut down long product operations in Q2 2025 due to failed government negotiations. The closure may result in approximately 3,500 job losses, and steel production will cease by early April after a delayed process. Key operational challenges, including high costs and competition from imports, have driven this decision, causing concern for reliant local businesses.
ArcelorMittal South Africa (AMSA) has announced plans to cease production of long products in the second quarter of this year, following unsuccessful negotiations with the government regarding a rescue package. This decision was influenced by a worsening business environment, leading to an anticipated loss of approximately 3,500 jobs, both direct and indirect. The initial closure was scheduled for January, but was delayed to fulfill existing orders.
The company will commence the shutdown of its blast furnaces in the first week of March and aims to halt steel production by early April. AMSA has cited several challenges impacting its operations, including inadequate railroad infrastructure, high electricity costs, an influx of inexpensive imports, and government policies that keep prices for steel scrap low, disadvantaging the company.
In a statement, AMSA expressed regret over the inability to reach timely solutions necessary to avert the closure. The energy sector’s plans to increase prices by nearly 13% from April 1, alongside proposed tariff hikes from state-run ports and railways, contribute to these challenges.
CEO Kobus Verster highlighted that the Newcastle Works and Vereeniging Works collectively produce 350,000 to 400,000 tons of steel products annually, which no other local companies can replicate. This impending closure raises concerns among businesses that depend on AMSA’s facilities for their steel supply.
The South African government previously explored a rescue package potentially totaling R1 billion ($53.6 million) to avert AMSA’s plant closures, indicating substantial efforts to support the struggling steel industry.
The shutdown of ArcelorMittal South Africa’s operations is a significant development for the local steel sector, with potential job losses and supply chain impacts. Despite government discussions for a financial rescue, the company’s challenges seem insurmountable under current conditions. The closure highlights critical issues within South Africa’s industrial environment, particularly regarding energy costs and competitive pricing.
Original Source: gmk.center
