ArcelorMittal South Africa is negotiating financial support to postpone the closure of its long steel business, impacting 3,500 jobs. The company faces significant operational losses, and discussions include potential government funding and support from the Industrial Development Corporation.
ArcelorMittal South Africa is in talks with the government and stakeholders to secure financial support aimed at delaying the anticipated closure of its long steel business. Earlier in February, the company announced plans to end operations that produce essential materials like fencing and rails by April, following unsuccessful negotiations with the government.
The proposed shutdown could impact 3,500 jobs and disrupt several industries, stemming from weak demand and infrastructure challenges. For 2024, ArcelorMittal’s operational loss for its long steel segment increased significantly to R1.1 billion, contributing to a total headline loss of R5.1 billion for the year ending December 31.
The company stated, “ArcelorMittal South Africa is engaging with stakeholders, including government, regarding funding and related matters to enable the deferral of the wind down of the longs business.” Moreover, they cautioned that without securing the necessary funds, postponing the closure would not be viable.
The initial announcement about the closure was made in January 2025, starting with the cessation of steel production and the subsequent closure of remaining operations by the end of Q1 2025. The South African government has proposed about R500 million in initial support to sustain steelworker salaries for a period of six to eight months.
Discussions are ongoing with the Industrial Development Corporation (IDC) for additional bridge financing, which may lead to the IDC increasing its stake in ArcelorMittal from 8.2%. The IDC, alongside the government, has also encouraged ArcelorMittal to explore offers for the two mills set to be closed, located in Vereeniging and Newcastle.
Keeping the mills operational is crucial for government efforts to revitalize the economy via infrastructure initiatives and support critical sectors like car manufacturing and mining, which significantly contribute to foreign exchange earnings. ArcelorMittal seeks approximately R3 billion to sustain mill operations for an extra year and to build inventory for automakers, including Volkswagen and Isuzu Motors.
Besides financial backing, ArcelorMittal is requesting the removal of export taxes on scrap metal, implementation of import duties, and reductions in electricity and freight rail costs, as reported by Reuters.
ArcelorMittal South Africa is actively pursuing funding to delay the planned shutdown of its long steel business, essential for maintaining jobs and supporting various industries. The company faces significant operational losses and is seeking around R3 billion to sustain operations. Government and IDC discussions focus on vital support measures, including workforce salary coverage, which are crucial for the economy.
Original Source: www.mining-technology.com
