Johnathan Paoli
Steel producer ArcelorMittal South Africa (AMSA) has indicated that it may close its long-products business, which could result in the loss of 3 500 direct and contractor jobs at its Newcastle and Vereeniging operations.
The steelmaker cited a 20% fall in demand over the last seven years, rising transport and logistics costs and the prevailing scrap advantage over iron-ore as reasons for giving up the operations.
This comes after years of aggressive cost cuts to save the business, despite a declining rate of profitability for the company.
AMSA slumped to a R448-million loss in the interim period to June 30, a dramatic deterioration from the comparable period of 2022 when it reported a R3-billion profit.
The poor performance was attributed to intense load shedding during the period and the negative impact of the collapse of the Transnet Freight Rail service.
AMSA CEO Kobus Verster said the board reached the decision to cut down on operations, only after all other possible options were exhausted and had not been taken lightly.
Verster said in light of the potential negative impact on both the regional and local economies, a consultation process in accordance with Section 189(3) of the Labour Relations Act will be initiated with unions and “every effort will be made to manage the number of jobs affected”.
The CEO said that the wind-down would exclude the coke batteries at Newcastle, which would remain operative, producing metallurgical coke for use at the Vanderbijlpark Works, and for sale of commercial market coke to the ferro-alloy industry.
“Throughout the wind down process, ArcelorMittal South Africa will engage with its customers and suppliers through an orderly and well-considered process to minimise the disruptions to their business, as far as reasonably possible,” Verster said.
A detailed wind down implementation plan is expected to be developed and consultations with both unions and affected communities still to be announced.
INSIDE POLITICS
