Senior motor industry officials believe a potential production crisis costing more than 100,000 jobs, caused by ArcelorMittal SA’s (Amsa’s) proposed closure of its Newcastle long-steel factory, can be averted, or at least postponed, after emergency talks with the company and government.
Amsa announced two weeks ago that it would halt production at both its Vereeniging and Newcastle steel plants at the end of January. Newcastle provides the motor industry with 70,000 tonnes of long steel annually, primarily for automotive components used in vehicle manufacture.
Vehicle and components companies warned that the short notice could have a crippling effect on some companies, as it could take up to a year to find alternative suppliers and get them up to quality and safety standards.
Renai Moothilal, CEO of the National Association of Automotive Component and Allied Manufacturers (Naacam), warned that 16,000 jobs were threatened at components companies and another 100,000 in other industries providing the automotive sector with goods and services. On Thursday, however, he said he believed a solution could be found.
Mikel Mabasa, CEO of vehicle manufacturers and importers association Naamsa, said that at a meeting on Wednesday, Amsa management asked the industry to provide a 12-months forecast of orders, to help the company assess possible solutions. It also asked the motor industry to increase long-steel orders.
Of the 70,000 tonnes now provided, 60% is bought by Toyota components suppliers. Other vehicle companies and their suppliers rely mainly — in some cases, exclusively — on imported steel.
In certain cases, it is because they need steel alloys not available from Newcastle. In addition, aluminium is often preferred to steel. Nevertheless, Mabasa said: “There is definitely an opportunity for our industry to buy more Newcastle steel. It’s a conversation we must have.”
The industry has asked trade, industry & competition minister Parks Tau for urgent help in preventing industry meltdown. He and government colleagues have said that SA cannot afford to lose local steel production.
Toyota SA CEO Andrew Kirby said on Thursday if this happened, it would accelerate the loss of local content in SA-made vehicles. Under the government’s 2021-35 Automotive Production and Development Programme (APDP), which governs the industry, the average value of local content in vehicles is supposed to grow from 40% to 60%.
Instead, Kirby said it had fallen to 38%. Without localisation, he said, many of the APDP’s other goals, such as doubling employment, were unachievable.
Kirby, Mabasa and Moothilal were speaking at Toyota’s annual conference on the state of the local motor industry. In 2024, new-vehicle sales of 515,712 were 3% fewer than the 531,775 of a year earlier.
Kirby and Mabasa, like most forecasters, had expected the market to grow. In 2025, they expect an increase of 3.55%, to about 534,000. If they are right, the market still will not have recovered to pre-Covid levels. In 2019, sales totalled 536,612. In the market’s favour is that sales of minibus taxis are recovering.
Last year, after suspected gangsters were granted bank finance to buy thousands of taxis, only to stop paying and disappear with the vehicles, some banks pulled out of the sector.
Toyota, which produces almost all the market’s taxis, saw monthly sales collapse from 1,400 to 300. They have now recovered to 600 but Kirby said they were unlikely to exceed 800 in the medium term until full confidence had returned to the market. Vehicle exports also suffered in 2024, dropping by a reported 22.8% compared to a year earlier, from 399,594 to 308,830.
However, Kirby said it appeared the 2024 figure was incorrect, owing to an error by an exporter. A corrected figure is expected next week.
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