ArcelorMittal South Africa to Cease Long-Steel Operations, Threatening Jobs
ArcelorMittal South Africa plans to shut down its long-steel division, endangering 3,500 jobs, as the company contends with severe market challenges. The production is set to cease by month-end, following a decision initially announced in February. The firm cites deteriorating market conditions and rising competition, particularly from low-cost imports, as contributing factors to its woes.
ArcelorMittal South Africa announced its decision to close its long-steel production operations, which threatens approximately 3,500 jobs. The cessation of steel production is expected to occur by the end of the month, although the final tally of job losses remains undetermined. Initially revealed in February, the closure was postponed as the company engaged in consultations with government officials and a state-owned logistics enterprise. According to the company, the South African steel sector now faces unprecedented challenges due to declining global and local markets, elevated operational costs, and the influx of inexpensive imports, prominently from China.
Chief Executive Officer Kobus Verster expressed disappointment regarding the inability to reach a sustainable resolution to mitigate these challenges, stating, “We are disappointed that all our efforts over the last year have not translated into a sustainable solution.” This situation emerges amid the coalition government’s concerted efforts to rejuvenate the country’s industry, which has witnessed minimal economic growth—averaging less than 1% annually—over the past decade, trailing behind population growth.
The closure of ArcelorMittal South Africa’s long-steel business highlights the critical state of the steel industry within the country, deeply affected by global economic dynamics. High operational costs, along with fierce competition from low-cost steel imports, primarily from China, have severely impacted local production. The company’s decision reflects broader economic challenges faced by South Africa, where the steel industry has historically played a significant role. Additionally, this move reflects ongoing discussions between the company and the government regarding industrial policy that aims to enhance competitiveness in the local market.
ArcelorMittal South Africa’s impending closure of its long-steel operations signifies a major setback for both the company and the South African economy, endangering thousands of jobs amid a continuing struggle for the steel industry. The factors driving this decision are rooted in both local and global pressures that have rendered the steel business unsustainable in its current form. As the country contends with economic stagnation, the future of the steel sector remains uncertain without substantial reform and intervention.
Original Source: m.economictimes.com
