Investec has been brought in to help with the possible sale of ArcelorMittal South Africa (Amsa’s) non-core land assets amid state efforts to keep the long steel business running.
An Investec spokesperson said the company is engaged to sell certain non-core and non-strategic land assets and the company is not engaged to sell the long steel plant in Newcastle.
In a statement by Amsa on Thursday the company said it was in talks with stakeholders, including the government, for a funding package that would defer the winding down of the long steel business. If funding was not forthcoming, it would be difficult to save the business.
“The wind-down process has not been stopped and is being managed in a manner that accommodates ongoing funding discussions,” the statement said.
“During this time Amsa has received various approaches regarding the strategic alternatives for the company, as well as the longs business. None of the approaches constitute a firm intention to make an offer in terms of the Companies Act, 2008. The company will continue to explore strategic alternatives where appropriate.”
The department of trade, industry & competition (DTIC) said this week it was still trying to avoid the closure of the Newcastle operation.
It noted that it and the Industrial Development Corporation had provided Amsa with R380m last month in addition to the R1bn working capital facility extended by the IDC in June 2024.
These interventions are not designed to provide direct financial relief to Amsa but are part of a broader strategy to protect South Africa’s steel industry and ensure the preservation of its industrial capacity
— Department of trade, industry & competition
The DTIC confirmed that funding of nearly R417m had been approved under the UIF temporary employee relief scheme (TERs) to sustain 2,982 Amsa staff over the next 12 months on condition of productivity improvements.
“These interventions are not designed to provide direct financial relief to Amsa but are part of a broader strategy to protect South Africa’s steel industry and ensure the preservation of its industrial capacity,” the DTIC said.
It said the government remained committed to exploring alternative solutions to sustaining long steel production and safeguarding jobs.
In January Amsa announced it would close its long steel operations in Newcastle and Vereeniging, putting 3,500 direct jobs and 20,000 others in the steel value chain on the line.
The company sought a R3.1bn rescue package from the government to sustain its operations for the next 12 months.
The rescue package request was contained in its application to the Commission for Conciliation, Mediation & Arbitration (CCMA) for TERs funding last month. After initially turning the application down last month, the commission granted the relief after receiving submissions from the DTIC and IDC on the importance of the long steel industry to the economy.
Bongumusa Khumalo, the CCMA’s acting national senior commissioner, said the steel sector shed 214,636 jobs between 2008 and 2023, and closure of the Newcastle steel mill would result in the loss of a further 3,500 jobs, with a R12bn impact on the fiscus.
“The temporary financial relief requested by Amsa could potentially alleviate the burden of the recurring losses the company was facing,” Khumalo said, describing the CCMA’s approval as a “rational assessment” that underscored the need to address Amsa’s plight “promptly and effectively”.
Willie Venter, deputy general secretary for the metal and engineering industry at trade union Solidarity, said the long steel business was still viable despite Amsa’s view that it was uncompetitive.
He said if the steelmaker could not operate the long steel business profitably, it should consider selling it to someone who could.
“The first option is to sell it off, keep the capacity and skills in place, and hopefully that is a viable option that somebody takes up,” Venter said.
“The other option is between the government and Amsa; they create a rescue package to keep the current long steel production going, but they still have to modernise the plant to keep it sustainable and competitive for a number of years to come, not just for months.”
Update: March 24 2025
This article has been updated to correct Investec's comments.
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