ArcelorMittal South Africa is negotiating funding to postpone the closure of its long steel business, impacting 3,500 jobs. The company’s long steel operations reported substantial losses due to weak demand and infrastructure issues. Government support of R500 million is proposed, while additional funding discussions are ongoing with the Industrial Development Corporation.
ArcelorMittal South Africa is currently in negotiations with the government and various stakeholders to secure financial assistance aimed at delaying the planned shutdown of its long steel operations. These operations, which include the production of materials such as fencing, rail, rods, and bars, were initially set to cease by April of this year following unproductive discussions with governmental entities.
The anticipated closure is poised to impact approximately 3,500 jobs and significantly disrupt multiple industries, primarily due to weak demand and ongoing infrastructure challenges. The operational loss for the long steel division has surged to R1.1 billion for 2024, contributing to a broader headline loss of R5.1 billion for the fiscal year ending December 31.
The company stated, “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.” They further indicated that “without agreement regarding the funding and related matters, the deferral of the wind down of the longs business will not be feasible.” Consequently, the wind-down process continues under management, accommodating ongoing funding discussions.
The initial announcement regarding the closure of the long steel products division was made in January 2025, with steel production ceasing first and remaining operations expected to terminate by the end of the first quarter of 2025. Proposed government support of about R500 million aims to cover steelworker salaries for six to eight months, as reported by Bloomberg.
Additional financial solutions are also being explored with the Industrial Development Corporation (IDC), which may raise its stake in the company from 8.2%. The IDC and government are urging ArcelorMittal to consider offers for the two mills scheduled for closure in Vereeniging and Newcastle. Keeping these mills operational is essential for South Africa’s economic rejuvenation, particularly concerning infrastructure projects and vital sectors such as automotive manufacturing and mining, which generate significant foreign exchange.
ArcelorMittal is seeking approximately R3 billion to sustain the mills for another 12 months while building inventory for automotive manufacturers, including Volkswagen and Isuzu Motors. Furthermore, the company has proposed the elimination of an export tax on scrap metal, alongside recommendations for implementing import duties and decreasing electricity and freight rail costs, as reported by Reuters.
In conclusion, ArcelorMittal South Africa is actively seeking financial assistance to delay the closure of its long steel operations, citing the significant economic repercussions of such an action. The firm is proposing a funding strategy that involves various stakeholders, including government support. The outcome of these negotiations is critical not only to the company but also to numerous interconnected industries and the overall South African economy.
Original Source: www.mining-technology.com
