ArcelorMittal South Africa Negotiates to Delay Long Steel Plant Closure
ArcelorMittal South Africa is negotiating with the government to secure funding that may postpone the closure of its long steel operations. The closure is set to impact 3,500 jobs and disrupt various industries due to significant operational losses attributed to weak demand and low-cost imports.
ArcelorMittal South Africa has initiated dialogue with the government and various stakeholders regarding potential funding that could postpone the closure of its long steel operations. The company initially announced on February 28 its intention to cease production of long steel products such as fencing materials, rail, rods, and bars by April due to unsuccessful negotiations with the government concerning the financially troubled plant.
In a recent statement, ArcelorMittal South Africa confirmed that discussions are ongoing, emphasizing that while the wind-down process continues, it is being managed to foster funding conversations. The company underscored that any deferral of closing the long steel business is contingent on reaching agreements regarding necessary funding and related issues.
Additionally, ArcelorMittal has requested the government to eliminate the export tax on scrap metal, arguing that it provides an unfair advantage to recyclers. The company is also advocating for the imposition of import duties as well as reductions in electricity and freight rail costs, which are essential for its operations.
A spokesperson from South Africa’s industry ministry acknowledged the ongoing discussions with ArcelorMittal and stated, “Government is engaged on saving the jobs.” The anticipated closure, first communicated in November 2023, has been attributed to weak market demand and persistent infrastructure challenges.
The closure is projected to affect 3,500 jobs, both directly and indirectly, and disrupt the supply chain for the automotive components sector, mining, rail, and construction industries. Notably, losses in ArcelorMittal South Africa’s long steel business escalated to 1.1 billion rand ($60.56 million) in 2024, up from 600 million rand the previous year, which reflects ongoing operational challenges exacerbated by low-cost steel imports, particularly from China.
ArcelorMittal South Africa is currently pursuing negotiations with the government to secure funding that may delay the closure of its long steel operations, which are significantly affected by losses and external market pressures. The proposed closure poses serious job risks and supply chain disruptions in critical industries in South Africa. The outcome of these funding discussions and proposed tax adjustments will be crucial in determining the fate of the long steel production sector.
Original Source: www.marketscreener.com
