ArcelorMittal South Africa is negotiating financial support with the government to delay the closure of its long steel business, originally planned for April, which would impact 3,500 jobs and various industries. The company reported significant operational losses and is seeking additional funds to sustain operations over the next year.
ArcelorMittal South Africa is currently in discussions with government and other stakeholders to secure financial support aimed at postponing the shutdown of its long steel division. Initially announced in February, the closure is expected to affect 3,500 jobs and is a consequence of declining demand and infrastructure issues that hinder operational viability.
The operational losses for the long steel division escalated markedly, reaching R1.1 billion in 2024, contributing to a headline loss of R5.1 billion by the end of last year. The company has indicated that without agreements regarding funding, the planned wind down of operations may proceed. Thus, the shutdown process remains ongoing despite the company’s efforts to negotiate potential funding solutions.
The South African Government has reportedly proposed approximately R500 million in initial funds to support steelworker salaries for a period of up to eight months. Discussions with the Industrial Development Corporation (IDC) also include potential bridge financing, which may allow the IDC to enhance its stake in ArcelorMittal beyond its current 8.2%.
Efforts to keep mills operational in Vereeniging and Newcastle are critical to advancing the government’s economic rejuvenation strategy, especially those sectors heavily reliant on steel, such as automotive and mining. ArcelorMittal is seeking around R3 billion to sustain these operations for an additional 12 months, ensuring inventory supplies for major automotive clients such as Volkswagen and Isuzu Motors.
Additionally, ArcelorMittal has called for the removal of an export tax on scrap metal, the introduction of import duties, and reductions in electricity and freight rail costs to enhance operational stability going forward.
ArcelorMittal South Africa’s ongoing negotiations for funding are crucial as they aim to avert the planned shutdown of its long steel division, which poses significant economic implications due to job losses and industrial disruptions. Government support and potential financial restructuring are essential components in maintaining operations and supporting the nation’s key economic sectors.
Original Source: www.mining-technology.com
