ArcelorMittal South Africa is set to close its long-steel operations, risking 3,500 jobs. The decision, delayed from earlier this year, reflects ongoing challenges in the steel industry due to falling market conditions and rising imports. CEO Kobus Verster expressed disappointment over the lack of a sustainable solution. The anticipated losses for the year are expected to increase compared to the previous year.
ArcelorMittal South Africa has announced the imminent closure of its long-steel business, putting approximately 3,500 jobs at risk. The company indicated that steel production is expected to halt by the end of the current month, with exact job loss figures still to be determined. This decision comes after a previously announced intention to close the business in February, which was postponed for further consultations with government officials and a state-owned transportation company.
The company cited a dire outlook for the South African steel industry, claiming it is undergoing its greatest sustained challenges since the financial crisis of 2008. Factors contributing to this downturn include declining global and local steel markets, rising costs, and an influx of low-cost imports, particularly from China. Chief Executive Officer Kobus Verster expressed disappointment that efforts made over the past year did not yield a sustainable solution to the industry’s persistent structural issues. He noted, “The issues tabled for resolution sought to level the playing field and could firmly address the structural problems within the South African steel industry.”
This closure poses a significant setback to the government’s ambition to boost industrial growth in a nation that has seen economic expansion below 1% annually for the past decade, trailing behind population growth. Additionally, the company anticipates reporting a larger loss for the year ending December, with losses projected between 4.06 rand to 4.41 rand per share, compared to a loss of 1.70 rand the previous year.
The closure of ArcelorMittal South Africa’s long-steel facility is a stark indicator of the challenges facing the South African steel industry today. With a combination of global market shifts, rising production costs, and increased competition from cheaper imports, the industry is at a critical juncture. The company’s struggles mirror broader economic issues in South Africa, where growth has faltered against demographic pressures. This situation highlights the need for effective policy interventions to stabilize the industry and protect jobs.
In conclusion, the impending closure of ArcelorMittal’s long-steel business marks a significant crisis for both the company and the South African steel industry, threatening thousands of jobs and reflecting underlying economic challenges within the country. Despite previous efforts to find solutions, the combination of international competition and local market dynamics has led to an unsustainable business model. The announcement poses not only immediate concerns for affected employees but also places further strain on the South African economy’s growth prospects.
Original Source: m.economictimes.com
