ArcelorMittal South Africa (Amsa), the country’s primary steel producer, is betting on the government’s implementation of higher protection measures to help buffer the impact of cheap imports that have resulted in its loss of market share.
The flood of imports, particularly from China, and spiralling power costs, which have increased by almost 900% in the past decade, have brought the steel industry to its knees.
The industry has been described as being in “survival mode” due to low demand for steel products in a subdued economy. The lack of government infrastructure investment to drive steel demand has also contributed to the industry’s decline.
Amsa, previously Iscor, has also cited the dysfunctional rail system and limited tariff protection as risks for the group.
Speaking during the presentation of Amsa’s financial results for the year ended December 31 2025, CEO Kobus Verster said the department of trade, industry & competition is likely to implement much fairer steel trade policies, which are scheduled to be gazetted in the first quarter of this year.
“In terms of the department of trade industry & competition implementing trade and localisation initiatives, I am confident of the signals we are getting; they will start implementing [what] many, if not all, other countries are doing. It is not only a steel issue; it also relates to automotive and many other products. A lot of work and consultation has been done. My view is that it is fairly close,” he said.
Amsa pulled the plug on its long steel business in November, which could result in the loss of 3,500 jobs. In 2020, in response to low demand, the group closed its Saldanha Steel plant.
While the curtain has been closed on the company’s Newcastle long steel operation, its Vereeniging plant will resume partial operations this year, after which it will again be placed in care and maintenance from 2027.
Amsa announced in January that it was in advanced talks with the Industrial Development Corporation (IDC) to find a “sustainable solution based on a non-binding term sheet regarding a potential transaction”.
Verster did not want to give details about the talks except to say that if successful, they would put the company in “a much better space”.
He denied claims that the group had walked away from negotiations with the IDC about keeping its long steel business alive.
“It wasn’t correct that someone walked away. Some days negotiations are difficult; you hit temporary deadlocks. That is just the way the process works. There was never a walking away or not talking,” he said.
On a positive note, Amsa this week announced it had clawed back losses and reported a headline loss of R3.35bn from a hefty loss of R5.1bn (458c loss per share) a year ago, with R2.34bn of the loss related to the second half of 2025. The attributable loss for the year amounted to R2.9bn (260c loss per share) compared to a loss of R5.83bn (524c loss per share) in 2024.
Willie Venter, deputy general secretary of the Solidarity trade union, said he hoped the company would be sustainable in the long run.
“We don’t see it as a sustainable position in the long run with the losses that are still occurring,” he said. “We want to see them in a sustainable position to justify the recent job losses. If they don’t get to a sustainable position after the recent job losses, there will be question marks about the strategic thinking of Amsa’s executive.”
The company said debt had increased to R6.8bn from R5.1bn a year earlier.
Verster said profitability and the strengthening of the balance sheet were the focus of the group, and that it had substantial assets under care and maintenance valued at R5bn.
If we are unable to restart an operation, then we should find a partner, somebody that can do that. We have valuable assets which can be easier for somebody else to convert and repurpose.
— Kobus Verster, Amsa CEO
“At the right moment we will start monetising those to reduce the debt; that will take a bit longer, but ultimately one is a restructured approach, and the other one is a self-help approach. The ultimate solution will be a combination of those two,” he said.
Verster said the group had to dispose of some of its noncore assets as well as assets under care and maintenance.
“If we are unable to restart an operation, then we should find a partner, somebody that can do that. We have valuable assets which can be easier for somebody else to convert and repurpose. It will be a combination of these things, and we will see positive movement during the year on those.”
Revenue fell 16% to R32bn and the company said that with the winding down of the long steel operations in Newcastle and Vereeniging the footprint adjustment would contribute R740m to the 2026 business plan.
The company’s hope for protection comes after the government gave a lifeline to the struggling ferrochrome industry through the gazetting of a block exemption enabling companies operating in “industries in distress” to collectively plan and agree on a negotiated pricing agreement (NPA) with Eskom, with a view to lowering energy costs without contravening the Competition Act.
This was in response to job losses in distressed industries, such as the wide-scale closure of smelters due in part to high energy costs. The NPA will allow large energy-intensive customers such as smelters to obtain discounted electricity tariffs in order to remain globally competitive and avoid closure.
Tough times to continue
Verster said the import of long steel products from China and Zimbabwe is a threat to Amsa, and a concern in the long term because of the overcapacity in the long steel business.
He said the government of Zimbabwe supports beneficiation and the country has cheap electricity. It produces 600,000t of steel and has ambitions to grow the capacity to 1.2Mt.
“The ability of them to produce long steel at a cost we cannot compete with will be problematic going forward,” he said.
He said the new Chinese steel facility in Nigel was also a threat to the local steel industry.
“If you incentivise the wrong thing, you get the wrong response. By discounting scrap in South Africa, you will have excess capacity of lower-quality product more than double the capacity of the country.”
Verster said tough times for the industry would continue as there was no sign of increased infrastructure spend to fuel demand for steel, making it vital for the government to address illicit steel imports.
“There is no real evidence of infrastructure spend coming to the market,” he said. “I think that we have to work on localisation; we have to work on keeping out the illicit imports to stimulate more uptake of our products in the local market.”
Amsa said that over the coming five years it will look at strengthening its business model. The group also wants to return its flats business to operating profitability.
Business Times
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