ArcelorMittal South Africa will halt long steel production in Q2 2025 after failed negotiations for a governmental rescue package, resulting in approximately 3,500 job losses. Challenges such as poor infrastructure, high tariffs, and cheap imports have hindered operations. The company will stop production by early April, raising concerns for other businesses reliant on its steel supplies.
ArcelorMittal South Africa (AMSA) has announced it will cease production of long steel products at its South African facilities in the second quarter of 2025. This decision follows unsuccessful negotiations with the government regarding a rescue package, as reported by Bloomberg. The closure is anticipated to result in approximately 3,500 direct and indirect job losses. Initially scheduled to close by January, the shutdown was postponed to complete existing orders, with blast furnaces expected to be shut down by the first week of March and steel production ceasing by early April.
The viability of AMSA’s operations has been compromised due to several factors including inadequate railroad connections, high electricity tariffs, an influx of inexpensive imports, and governmental policies that keep scrap steel prices artificially low for smaller competitors. AMSA stated, “Regrettably, the parties have not been able to find timely solutions required to defer the winddown.” The situation for the company has worsened, with the primary energy provider planning to increase electricity prices by approximately 13% effective April 1, and state-owned transportation services also seeking tariff hikes.
Kobus Verster, Chief Executive Officer of AMSA, indicated that the Newcastle Works and Vereeniging Works are responsible for producing 350,000 to 400,000 tons of steel products that no other South African company can deliver. The impending closure has raised concerns among various companies dependent on AMSA for their steel supply needs. Earlier, the South African government was contemplating a rescue package valued at up to R1 billion (approximately $53.6 million) to avert the shutdown of AMSA’s operations.
The impending closure of ArcelorMittal South Africa’s operations reflects significant challenges within the steel industry, affected by unfavorable economic conditions and inefficient negotiations with governmental entities. This situation not only threatens thousands of jobs but also poses risks to the supply chain of steel products within the country. Immediate interventions are critical to address these issues and support the sustainability of AMSA and the broader industrial sector.
Original Source: gmk.center
