ArcelorMittal to Shut Long-Steel Business in South Africa
TLDR
- ArcelorMittal South Africa will close its long-steel production operations by the end of the month
- The firm cited unsustainable conditions driven by high logistics and energy costs
- The closure could impact up to 3,500 jobs at the Newcastle and Vereeniging plants
ArcelorMittal South Africa will close its long-steel production operations by the end of the month, citing unsustainable conditions driven by high logistics and energy costs, lack of effective policy support, and cheap imports, particularly from China.
The Johannesburg-listed subsidiary of ArcelorMittal announced the decision after months of unsuccessful consultations with the South African government. A scaled-back coke-making operation in Newcastle will remain operational.
The company's decision highlights the worsening crisis in South Africa’s steel industry, which has faced persistent challenges since the 2008 financial crisis. High input costs, deteriorating markets, and global competition have exacerbated the situation. The closure could impact up to 3,500 jobs at the Newcastle and Vereeniging plants, as well as the AMRAS rail mill.
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Key Takeaways
For South Africa, the closure deals a blow to government efforts to revive economic growth and safeguard jobs. It also underscores the need for strategic policy interventions to protect critical industries in a challenging global environment. The company expects widened losses for 2023, with loss per share estimated at 4.06-4.41 rand, compared to 1.70 rand in the prior year. Shares fell as much as 15% in early trading following the announcement.
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