The department of trade, industry & competition says the government will not abandon its search for a buyer for ArcelorMittal South Africa’s (Amsa’s) long steel business as the state ramps up its intervention in sectors strangled by the cost of power.
The comment, made in response to a question by DA MP Mlondi Mdluli, comes less than two months after the government’s own attempt to take over the unit and stave off thousands of retrenchments ended in vain.
“The department and the Industrial Development Corporation (IDC) are administering a process of interested parties willing to take over parts of the Amsa business, including the Newcastle and Vereeniging mills,” the department said on Thursday.
“This is aimed at avoiding full decommissioning of plant and equipment and securing the future of long steel production in South Africa.”
Bloomberg reported in November that Luxembourg-based Amsa had rejected the state-owned IDC’s R8.5bn offer to take over the long steel operation, leaving a question mark over the fate of the struggling unit.
In recent months, the government has increased its drive to intervene in the local steel sector, which continues to fold under the pressure of high electricity tariffs and tight Asian competition.
Having rolled out its most extensive review of steel tariffs in more than 20 years, South Africa is drafting a new growth path for the local industry.
The department said it is working with industry and labour to formulate a steel roadmap that will include alternatives for the Newcastle and Vereeniging operations aligned to global technological developments.
“The future of long steel production is in mini mills powered by electric arc furnaces, often with renewable energy,” it said.
“Additionally, the department and IDC are considering and assessing various projects in other sectors to mitigate the economic impact of the plant closures on the affected towns.”
The steel sector’s woes have already sparked significant policy changes in the past few weeks. Trade, industry & competition minister Parks Tau on Wednesday moved to ease antitrust laws by exempting industries “in distress” due to persisting “macroeconomic challenges” from certain sections of the Competition Act.
Amsa’s repeated threats to shut down its long steel outfits in KwaZulu-Natal and Gauteng and lay off their 3,500 combined workforce have also elicited generous cash injections from the IDC.
The development finance institution, South Africa’s biggest, is a supporter of the country’s steel industry and wrote Amsa a R1.7bn cheque in April to defer the closure of the long steel business.
Meanwhile, growing calls for state intervention near the end of last year saw the National Union of Metalworkers of South Africa (Numsa) asking the state to nationalise Amsa to drive local manufacturing and save jobs.
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