ArcelorMittal South Africa is in talks to defer long steel plant closure

Source: Reuters.

The steelmaker said on Friday, 28 February that it would cease long steel production of fencing material, rail, rods and bars by April this year after discussions with the government failed to avert the loss-making plant's closure.

"ArcelorMittal South Africa is engaging with stakeholders, including government, regarding funding and related matters to enable the deferral of the wind down of the longs business, as well as regarding the interventions previously announced," the company said in a statement.

The ongoing wind-down processes have not been stopped, it said, but was "being managed in a manner that accommodates ongoing funding discussions".

"It should be noted that without agreement regarding the funding and related matters, the deferral of the wind down of the longs business will not be feasible," the company said.

Apart from seeking funding, ArcelorMittal has asked the government to remove an export tax on scrap metal, which it says gives an unfair advantage to recyclers. The company also wants the government to impose import duties and facilitate lower electricity and freight rail costs.

A spokesperson for South Africa's industry ministry confirmed talks with ArcelorMittal and other industry players.

"Government is engaged on saving the jobs," the spokesperson said by email.

The planned closure, announced in November 2023, was blamed on weak demand and persistent infrastructure problems.

It would impact 3,500 direct and indirect jobs, while also disrupting supply into the automotive components manufacturing sector as well as the mining, rail and construction industries.

ArcelorMittal South Africa's longs business' operational loss doubled to R1.1bn ($60.56m) in 2024, from R600m the year before.

The company reported a headline loss of R5.1bn for the year ended 31 December, compared with a R1.89bn headline loss in 2023.

It said at the time the losses were driven by poor financial performance at its long steel business as well as low-cost steel imports, particularly from China.