In a move signalling government’s resolve to keep ArcelorMittal SA’s (Amsa’s) long steel business afloat, the state will over the next year pick up the wage bill of the embattled unit, delaying its closure and saving about 3,500 jobs.
“The temporary employee/employer relief scheme (TERS) has approved funding of nearly R417-million to sustain 2,982 employees over the next 12 months,” the department of trade, industry & competition said on Wednesday.
“As a condition of this support, Amsa is required to participate in the productivity SA turnaround and recovery programme. These interventions are not designed to provide direct financial relief to Amsa but are part of a broader strategy to protect SA’s steel industry and ensure the preservation of its industrial capacity,” the department said.
“The government remains committed to exploring alternative solutions to sustain long steel production and safeguard jobs.”
One of Amsa's anchor shareholders, the Industrial Development Corporation, has also invested R380m in the company, the department said.
The company on Wednesday said it had received “various approaches regarding the strategic alternatives for the company, as well as the longs business”. However, it said none of the approaches amount to takeover bids.
“Amsa 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,” it said.
“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. Accordingly, the wind-down process has not been stopped and is being managed in a manner that accommodates ongoing funding discussions,” it said.
Long steel products include rebar, wire rods, merchant bars, rails and sections.
Amsa, Africa’s largest steel producer, last year cited the headwinds — from deteriorating global and local steel markets to the high cost of electricity and logistics — its long steel business faced.
A report by independent economic research consultancy Econometrix released last month said SA’s embattled steel industry has bled 25,000 jobs since 2009 — losses that continued after the introduction of the price preference system (PPS) more than a decade ago.
The report points to the government’s interventionist policies in the steel industry, in which production has plunged 40% below its 2006 peak.
Data shows that about 7,500 jobs were lost in the sector since 2014 after the introduction of the PPS the previous year. The policy regulates the export of ferrous and nonferrous scrap by not allowing the exportation of scrap metal unless it has first been offered to domestic consumers at a discount to the international price at the time of sale.
However, some in the steel industry believe the PPS played a pivotal role in sustaining the industry.
“The rollout of PPS safeguards our national interests by enabling the further refinement of waste using low carbon methods and more efficient power usage, which benefits our grid.
“This is a stark contrast to the outdated model of ‘legacy mills’, which rely heavily on mining-related products like iron ore, coking coal and energy intensive processes,” said Ebrahim Khan, director at Get Metal Group.
Update: March 19 2025
This story has been updated with new information.
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