ArcelorMittal South Africa plans to shut down its long-steel operations, jeopardizing 3,500 jobs, with production ceasing by month-end. This decision follows significant industry challenges, including international competition and rising costs. CEO Kobus Verster voiced disappointment over the inability to achieve sustainable solutions to the industry’s problems. The company expects substantial losses for the year as the government seeks to stimulate industry growth amid economic stagnation.
ArcelorMittal South Africa has announced its decision to close its long-steel operations, resulting in the potential loss of approximately 3,500 jobs. The cessation of production is expected to occur by the end of the month, although the final tally of job losses has yet to be determined. This closure follows an initial announcement last February, with a subsequent delay after consultations with government and state-owned transportation entities.
The company’s decision reflects the challenging landscape faced by the South African steel industry, which is experiencing significant difficulties, especially since the financial crisis of 2008. ArcelorMittal highlighted various factors contributing to these challenges, including deteriorating local and global steel markets, high operating costs, and increased low-cost imports primarily from China.
Chief Executive Officer Kobus Verster expressed disappointment, stating, “We are disappointed that all our efforts over the last year have not translated into a sustainable solution. The issues tabled for resolution sought to level the playing field and could firmly address the structural problems within the South African steel industry.”
The closure presents a formidable obstacle to the South African government’s ambitions of revitalizing the industrial sector, particularly in a country with an economy that has witnessed an average growth rate of less than 1% over the past decade, trailing behind population growth rates. Furthermore, ArcelorMittal South Africa anticipates reporting increased losses for the fiscal year ending December, with projected losses per share expected to range from 4.06 rand to 4.41 rand, a marked decline from the previous year’s loss of 1.70 rand.
The South African steel industry is undergoing a critical phase, marked by challenges that have been exacerbated since the 2008 financial crisis. Key issues such as increased production costs, declining global demand, and a surge in imports, particularly from China, have severely impacted the sustainability of steel production in the region. The government has been striving to stimulate industrial growth; however, the failure to find viable solutions to support local industries has further complicated the economic landscape.
In summary, ArcelorMittal South Africa’s impending closure of its long-steel business signals a significant blow to the local economy, threatening thousands of jobs amid a struggling steel industry. The combination of rising costs, competitive pressure from imports, and stagnant economic growth underscores the urgent need for structural reform within the sector. The company’s projected financial losses further illuminate the gravity of the situation and the challenges that lie ahead for the South African economy.
Original Source: m.economictimes.com
