ArcelorMittal South Africa will cease production of long products in Q2 due to unsuccessful government negotiations. The shutdown will result in the loss of around 3,500 jobs and is attributed to high operating costs and an influx of cheap imports. The company urges the urgency of addressing these challenges as it begins the closure process, impacting other local operations reliant on AMSA’s production.
ArcelorMittal South Africa (AMSA) has announced the cessation of long product production at its South African facilities in the second quarter of this year, following unsuccessful negotiations with the government regarding a financial assistance package. This decision, as reported by Bloomberg, is expected to impact approximately 3,500 direct and indirect jobs, as AMSA had previously planned for an earlier closure by the end of January but postponed to fulfill outstanding orders.
The company has indicated it will begin decommissioning its blast furnaces in the first week of March, with all steel production slated to cease by early April. AMSA cited several challenges contributing to its operational instability, including inadequate rail infrastructure, rising electricity costs, an influx of low-priced imports, and government pricing policies affecting steel scrap used by smaller competitors.
AMSA expressed disappointment following the negotiations, stating, “Regrettably, the parties have not been able to find timely solutions required to defer the winddown.” Furthermore, the circumstances have not improved, as the energy company has announced plans to increase tariffs nearly 13% effective April 1, alongside proposed hikes in fees by state-owned transportation services.
The closure of AMSA’s Newcastle Works and Vereeniging Works, which collectively produce 350,000 to 400,000 tons of steel products exclusively generated by AMSA, is a cause of concern for other enterprises dependent on these facilities for their steel supply. Previously, discussions were held with the South African government concerning a potential rescue package estimated at R1 billion (approximately $53.6 million) aimed at averting this closure.
In conclusion, ArcelorMittal South Africa will halt steel production due to failing negotiations for state support, which has dire implications for employment and the broader industry. Key challenges highlighted include infrastructure issues and rising tariffs, exacerbating the economic viability of AMSA’s operations. The planned shutdown of these facilities poses significant concerns for other companies reliant on their steel products and exemplifies the urgent need for solutions in the South African industrial sector.
Original Source: gmk.center
