ArcelorMittal South Africa is negotiating with the government for funding to postpone the closure of its long steel operations, initially planned for April 2024. The closure, driven by weak demand and operational losses, could affect 3,500 jobs and several industries. The company has also requested the elimination of an export tax on scrap metal and other supportive measures to improve its competitiveness.
ArcelorMittal South Africa announced that it is currently in discussions with the government and other parties to secure funding aimed at postponing the closure of its long steel operations. This announcement follows the company’s earlier statement on February 28, indicating plans to halt production of fencing materials, rail, rods, and bars due to unsuccessful discussions intended to save the loss-making plant.
In an official statement, ArcelorMittal mentioned, “ArcelorMittal South Africa is engaging with stakeholders, including government, regarding funding and related matters to enable the deferral of the wind down of the longs business, as well as regarding the interventions previously announced.” While the wind-down procedures have not been halted, they are being managed to accommodate ongoing negotiations for funding.
The company emphasized that without an agreement on funding, deferring the closure of the long steel business would not be practical. Additionally, ArcelorMittal has requested that the government eliminate the export tax on scrap metal which they believe undermines their competitiveness, while also advocating for import duties and reduced electricity and rail freight costs.
A spokesperson from South Africa’s industry ministry confirmed that discussions with ArcelorMittal and other industry stakeholders are ongoing, asserting that “Government is engaged on saving the jobs.”
The decision to close the plant, which was announced in November 2023, was primarily attributed to declining demand coupled with ongoing infrastructure challenges. This closure would affect approximately 3,500 jobs directly and indirectly and impact supply chains in the automotive components sector, as well as mining, rail, and construction industries.
The longs business of ArcelorMittal reported operational losses of 1.1 billion rand (approximately $60.56 million) in 2024, which is a substantial increase from a loss of 600 million rand the previous year. The company also disclosed a headline loss of 5.1 billion rand for the fiscal year ending December 31, compared to a loss of 1.89 billion rand for 2023, which it attributed to poor performance in its long steel sector and the influx of low-cost steel imports, especially from China.
ArcelorMittal South Africa is actively seeking funding to delay the closure of its long steel operations, which was initially scheduled for April 2024. With ongoing discussions with the government about funding and other supportive measures, the company aims to mitigate the significant job losses and repercussions on various industries that would follow the plant’s closure. The operational losses faced by the longs business underscore the challenges that necessitated these discussions and negotiations.
Original Source: www.marketscreener.com
