Johannesburg, Jan 6 (PTI) ArcelorMittal South Africa Limited (AMSA), the local subsidiary of Indian-born British steel magnate Lakshmi Mittal, will cease operations at its long steel plants in the country, impacting over 3,500 jobs.

AMSA made this announcement in a recent statement after an earlier agreement with the government to defer the closure while some alternatives were explored. This was when AMSA decided in November 2023 to place its long steel business into care and maintenance due to prolonged weak economic conditions, logistics and energy challenges, and unsustainable competition from low-cost imports, especially from China.

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“As a company, 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 against international and local competitors,” said CEO Kobus Verster.

“The issues raised outlined those factors that could have, and still can, firmly address the structural problems within the South African steel industry, especially for our (long steel) business, but also within the company, the South African steel industry and value chain.

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“We had hoped that matters would not have come to this conclusion, at a time when our country can ill-afford job losses and the further erosion of industrial capacity,” he said.

Verster said after stakeholders, including government and labour, raised concerns about the potential loss of high-quality local steel production and the socioeconomic impacts on (the town of) Newcastle and its surrounding communities, AMSA had worked extensively with them to explore alternatives for sustaining the long steel business.

“While not seeking subsidies, the company requested policy support to address structural constraints affecting the steel sector. Efforts to delay closure through targeted short- and longer-term interventions continued throughout 2024, with operations extended to provide time for securing solutions.

“While the company appreciates the support from government and other stakeholders, and having made some progress with the identified initiatives, these have not been adequate,” AMSA said.

The company said despite all efforts, the package of initiatives sought had not materialised to a level that would improve its situation.

The company highlighted ongoing engagement with government since December 2023 to address structural issues affecting the business and emphasised the urgency of policy interventions to create a level playing field in the steel industry.

“Initial signs of recovery in international steel prices, following announced Chinese stimulus measures, were short-lived. By year-end, the Company faced no alternative but to proceed with the winding down of the Longs Business, prioritising a well-considered and responsible process to minimise the impact on employees and stakeholders, while ensuring the sustainability of its remaining operations,” AMSA said.

AMSA remained confident that the remaining parts of its steel plants business could be successfully restructured to be competitive, sustainable and profitable. Newcastle's coke-making operations will continue, though scaled back to reflect reduced demand.

Steel production is anticipated to cease by late January 2025, with the wind-down of the remaining production processes completed in the first quarter of this year.

The South African Iron and Steel Institute (SAISI) earlier reported that South Africa's year-to-date November 2024 crude steel production of 4.42 million tonnes was 2.3% lower year-on- year. This year's crude steel production level is likely to be some 30% below that of 2018, now placing South Africa behind Egypt and Algeria in Africa. Zimbabwe, Kenya and Tanzania, amongst others, are rapidly supporting and expanding their steel industries.

AMSA was born out of the erstwhile state-owned steelmaker Iscor, which Mittal helped turn around before eventually buying it out.

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