ArcelorMittal South Africa is negotiating with the government for funding to delay the closure of its long steel business. The planned shutdown, affecting 3,500 jobs, is primarily due to financial losses and weak demand. The government has proposed initial support, while further funding and policy adjustments are necessary for the mills to continue operations.
ArcelorMittal South Africa is currently negotiating financial support with the government and other stakeholders to postpone the closure of its long steel business. The company announced in February its plan to cease long steel operations, which include products like fencing, rails, rods, and bars, by April, due to unsuccessful talks with the government, weak demand, and infrastructure challenges, affecting approximately 3,500 jobs across various sectors.
The operational loss for the long steel division has significantly escalated, reaching R1.1 billion in 2024, alongside a reported headline loss of R5.1 billion for the previous fiscal year ending December 31. The company has indicated that discussions regarding funding are ongoing, stressing that a lack of agreement will render any deferral of the wind down unfeasible. Therefore, the wind down process is being managed while accommodating these crucial funding conversations.
Originally announced in January 2025, the closure of long steel products division is set to commence with a halt in steel production, with remaining operations due to shut by the end of the first quarter of 2025. The South African Government has proposed initial financial aid of R500 million to support steelworker salaries for a period of six to eight months, as reported by Bloomberg.
Further negotiations are underway with the Industrial Development Corporation (IDC), which is considering increasing its stake in ArcelorMittal from 8.2%. Additionally, the IDC and government are urging ArcelorMittal to evaluate offers for the two mills facing closure, located in Vereeniging and Newcastle, with the mills deemed essential for economic rejuvenation through infrastructure projects, as well as supporting key sectors such as car manufacturing and mining.
To maintain these mills for an additional 12 months and build inventory necessary for automakers like Volkswagen and Isuzu Motors, ArcelorMittal is seeking approximately R3 billion. Alongside funding, the company is also advocating for the elimination of the export tax on scrap metal, the enforcement of import duties, and decreased costs for electricity and freight rail transport, as noted by Reuters.
In summary, ArcelorMittal South Africa is actively pursuing funding to avoid the impending closure of its long steel division, which threatens thousands of jobs and crucial industry operations. With significant operational losses and support from the government and IDC, the company aims to keep the mills functional for a longer duration, outlining various financial and policy changes needed for this endeavor.
Original Source: www.mining-technology.com
