The government and one of SA’s largest trade unions said on Tuesday that engagements were continuing with troubled steel producer ArcelorMittal SA (Amsa), over the decision to close its longs (steel) operations in Newcastle and Vereeniging, affecting at least 3,500 jobs.
Longs steel products include rebar, wire rods, merchant bars, rails and sections. Amsa, Africa’s largest steel producer, announced two weeks ago it was winding down its long steel plants, including the Newcastle and Vereeniging operations and the rail and structures subsidiary, Amras. The decision was due to “prolonged weak economic conditions, logistics and energy challenges, and unsustainable competition from low-cost imports”.
In November, SA’s crude steel production was at 4.42-million tonnes, down 2.3% year on year. The pressure on SA’s steel industry saw the department of trade, industry and competition meeting stakeholders in the steel and engineering value chain in November, when “it was agreed that urgent, radical and ambitious interventions were needed to address the decline”, Amsa said.
Phakamile Hlubi, spokesperson of the National Union of Metalworkers of SA (Numsa), the country’s largest union with more than 450,000 members, said: “We are engaging with Amsa and we remain committed to finding a permanent solution.”
Trade, industry and competition (DTIC) minister Parks Tau’s spokesperson, Yamkela Fanisi, said a task team comprising “all the economic cluster ministers” had been set up to deal with the matter.
“We don’t want to comment on the matter until we settle a deal with Amsa, but what we can say is that we are having ongoing engagements with them,” Fanisi said.
In a media statement on January 8, the DTIC said the steel industry was critical in the reconstruction and recovery plan for the SA economy, “particularly the manufacturing, mining, construction, engineering and transportation sectors, which are at the centre of the industrialisation, localisation and beneficiation programmes of government”.
“While the immediate task will be on addressing structural issues affecting Amsa’s longs steel business, the broader focus should also be on addressing productivity improvements and supply-chain efficiencies, investments in low-carbon technologies, competitiveness and regaining the market share,” the DTIC said.
“It is also important that public and private sector’ entities and companies commit themselves to procure locally manufactured steel products in their projects. Undoubtedly, such a commitment will contribute positively to aggregate demand, job creation and economic growth in SA.”
Amsa said it had had ongoing engagement with the government since December 2023 to address structural issues affecting the longs business, and emphasised the “urgency of policy interventions to create a level playing field in the steel industry”.
“Initial signs of recovery in international steel prices, following announced Chinese stimulus measures, were short-lived. Despite implementing significant cost-cutting and cash management measures, the financial outlook for the fourth quarter of 2024 remained extremely challenging, and consequently the expected financial performance for the 2024 financial year against that of 2023 will be substantially weaker,” the steel producer said in a Sens statement two weeks ago.
Regarding its decision to wind down the longs business, Amsa said it was at a point where “any further delay could affect the sustainability of the company and, therefore, a decision cannot be pushed back any further”.
“The board and management of Amsa have a fiduciary and legal duty to ensure that the overall business remains sustainable in the longer term. Consequently, and with deep regret, the board and management has had no option but to take the difficult decision to proceed with the wind-down of the longs business…. Amsa remains confident that the remaining business can be successfully restructured to be competitive, sustainable and profitable.”
Amsa spokesperson Tami Didiza said: “We continue to engage with government and other stakeholders to ensure the long-term viability and profitability of the Amsa business.”
Employment and labour minister Nomakhosazana Meth’s spokesperson, Thobeka Magcai, confirmed that a team from the ministry led by Meth attended a meeting with Amsa officials last Friday.
“The minister approached Amsa to urgently discuss the matter of the imminent closure, as 3,500 jobs were reported to be at risk. The minister wanted a briefing from the management to establish ways in which the department can also provide support to enhance the ongoing government support led by the DTIC,” Magcai said.
“The support will include all available resources such as financial, advisory and policy-related…. There is a high possibility of further future engagements, as the minister is monitoring the situation. The way forward is that minister Meth has appealed to Amsa to halt the section 189 retrenchment process, which had undergone consultative processes with labour unions, to give her a chance to effect the proposed recommendations,” she said.
“The minister also proposed the establishment of a task team of both parties at a technical-level to monitor the situation and develop sustainable solutions to the company challenges. We will, in due course, update the media on the process.”
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