The planned closure of ArcelorMittal SA’s (Amsa's) Newcastle plant presents a devastating moment for the 3,500 affected employees. While the effect on these workers and their families should in no way be downplayed, it is important to distinguish between the operational challenges of ArcelorMittal SA and the viability of the broader SA long steel industry.
Despite the misperceptions of some, the long steel manufacturing sector in SA will continue to be sustainable for the foreseeable future, provided it is given the necessary regulatory and policy support by government. Half of the country’s long steel output already comes from electric steel producers, companies that melt scrap into new steel, emitting a fraction of the polluting CO2 of traditional blast furnaces. These producers are not just surviving but growing, and represent a global pivot towards cleaner manufacturing that is reshaping one of the world’s most polluting industries.
Globally, steel accounts for about 7% of CO2 emissions, making it one of the heaviest polluting sectors and pressure on the industry to reduce their environmental impact is mounting. In China, which produces more than half the world’s steel, the country has already shut down more than 23 outdated, heavily polluting blast furnaces. An oversupply of steel globally, rising climate commitments and tougher trade policies are forcing the Chinese steel industry to cut its level of production, while accelerating investment in cleaner technologies.
Electric arc and induction furnaces are at the centre of this shift. They use scrap steel rather than iron ore and coal, and they are far more energy efficient. While producing a tonne of steel via blast furnaces generates roughly 3,200kg of CO₂, the electric steel producers would emit just 500kg-800kg. That carbon advantage is becoming increasingly important as export markets begin to embed carbon tax pricing into trade. The global carbon credit trade market could be worth more than $50bn (R876bn) by 2030.
SA is also part of this move towards cleaner steel production. A network of facilities known as “mini mills,” (a term that does not accurately reflect their substantial capacity), currently supplies about half of the country’s domestic long steel requirements. These operations collectively employ more than 6,000 individuals across the Eastern Cape, Free State, Western Cape and Gauteng, demonstrating that sustainable steel production can also serve as a significant driver of job creation.
Coega Steels is a case in point. Employing 600 people near the Coega Port, the company is located strategically to service both the Eastern Cape and surrounding areas, and exports into Africa and beyond. It has also invested heavily in green steel manufacturing. In fact, Coega Steels has completed an environmental product declaration (EPD) for production of steel billets, making it the only SA steel producer in the country with this certification. The EPD measures environmental impact through the full life cycle of steel production, including raw materials, transport and electricity sourcing.
Given that 74% of Coega Steels’ carbon emissions come from electricity acquired indirectly from Eskom, the company is implementing phased renewable energy projects to acquire some of its electricity renewably, although Eskom remains essential. Coega Steel has already installed 785KW of rooftop solar, with 7MW of rooftop and ground-mounted solar being installed this year and another 16MW solar plant to be installed by the end of 2026, for a combined capacity of 24MW.
The doom-laden headlines that followed Amsa’s grim trading updates, such as a headline in Afrikaans that translated read “No hope for long steel factories”, miss the bigger picture. There is hope. SA’s electric steelmakers prove that steel can be produced locally at scale.
Ultimately the challenge for these electric steel producers is securing sufficient scrap, the lifeblood of electric steelmaking. This makes government support to ensure a reliable supply of scrap metal essential. Globally, more than 40 countries are moving to restrict scrap exports to secure supply for domestic producers. In the EU, Eurofer, the steel lobby representing all the EU’s steel producers, has proposed tight restrictions on scrap outflows. The US and Japan are expected to follow. The trend is clear: governments increasingly see scrap as a strategic resource and want it domestically beneficiated rather than exported.
In SA, two pieces of legislation are in place to protect domestic steelmakers. The first is the price preference system (PPS), which gives local buyers priority access to cheaper locally generated scrap before it can be exported. The second is the scrap export tax, which makes foreign sales less attractive and keeps more material in the domestic market. These measures level the playing field for local producers aligning SA with the global steel transition.
Critics, particularly scrap metal sellers and exporters, argue that these policies cut into their profits and encourage illicit flows. But the alternative is worse: allowing a vital material to leave the country so that steel is beneficiated abroad and exported back into SA as a pricier finished product.
SA has a choice: cling to outdated blast furnace technology weighed down by high emissions, or back the recycling-based producers already laying the foundations of a cleaner, more sustainable steel industry. The Newcastle closure could mark the end of an era, but it should also mark the beginning of a new cleaner, greener and more sustainable steel sector in SA.
• Saini is director at Coega Steels.
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