More than 3,000 employees at ArcelorMittal SA (Amsa) will again be at risk after the group said the long steel unit was still in trouble, suggesting that government action would determine the future of the business.
The company’s warning, which sent the share price plunging, implies that the state remedies — cash, wage subsidies and tariffs — may be cosmetic remedies for a deep structural rot.
Amsa wrung about R1.7bn from the state-owned Industrial Development Corporation (IDC) in April, coerced a 52% tariff on imported coil and scored R417m wage subsidies, but still teeters on the brink of shutdown come September. The IDC facility has been fully drawn down.
The facility saw Amsa defer the winding down of its long steel business while a viable and sustainable long-term solution was sought — a decision that saved about 3,500 jobs.
On Monday, the embattled steel producer imposed further pressure on the government to do more to clamp down on cheap imports, a request that is likely to be met with pushback from importers on the grounds that Amsa’s real headaches lie in higher electricity prices and a log-jammed rail network.
Amsa said it had spent just more than R300m in unplanned transport costs due to locomotive failures.
The company said the long steel business will only be able to “continue with financial support as the company does not have the ability to bear any further financial risk associated with its continued operations after the deferral period”, calling for urgent action to save the unit.
“Therefore, unless a solution is implemented timeously, and to ensure the orderly closure of the longs business as soon as possible after the deferral period, Amsa may have no option but to take certain operational steps to prepare for the wind-down process well in advance of September 30 2025.
“Notwithstanding, the longs business will continue to trade until the end of September 2025, having regard to the commitments made to its customers.”
Shares in Amsa slumped nearly 8% by the close on Monday, bringing losses so far this year to just more than 20% and underscoring a lack of investor faith that short-term bailouts can remedy deep-seated structural woes.
Earlier this month, the International Trade Administration Commission of SA (Itac) imposed a provisional 52.34% tariff on imports of corrosion-resistant steel coil in a bid to prevent “further injury” to the domestic market.
The move by the regulator was seen as a win for Amsa, which had asked for remedial action to be taken by authorities, decrying increased imports of corrosion-resistant steel coil. The application by Amsa was supported by Safal Steel.
Itac said steel coils were widely used in key downstream industries such as construction, roofing and cladding, appliance manufacturing and the automotive and engineering sectors.
SA is also rolling out its most extensive review of steel tariffs in more than 20 years — in a process that might lead to an increase in customs duties and stringent import controls to protect the embattled local industry.
Electricity costs
Amsa highlighted SA’s high electricity costs as one of the key constraints to the group. The group also highlighted poor rail service performance and “associated high, globally uncompetitive and unaffordable tariffs”, as structural impediments. It said discussions between stakeholders in the deferral period of the closure of the long steel business had yielded little result.
“Regrettably, limited progress has been made to date in redressing the major structural impediments. High imports continue to flood into the domestic market. Transnet’s rail performance deteriorated to its lowest levels ever, resulting in significantly elevated operating risk and unaffordable additional cost being borne by the company,” the group said.
Amsa has accused freight and logistics group Transnet of abusing its market dominance and charging excessive prices to the detriment of customers. To this end, Sub-Saharan Africa’s only primary steel producer has dragged the state-owned freight and rail group to the Competition Tribunal for recourse.
However, the company faces a tall order in convincing the tribunal of the merits of its complaint against the utility after the Competition Commission threw cold water on the complaint, forcing the company to do a self-referral.
Correction: July 15 2025
The previous version of this article said the IDC facility to Amsa was R16bn. It is actually about R1.7bn. We regret the error.
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