Arcelor Mittal South Africa’s (Amsa) latest financial results point to a light at the end of the tunnel as talks with the state open the door to policy changes and a potential buyout.
The group said discussions with the Industrial Development Corporation (IDC), which could support the reopening of its long steel business in Newcastle and Vereeniging, are continuing.
If successfully concluded, talks with the nation’s biggest development finance institution “will shape the company’s outlook for 2026 and beyond”, said Amsa.
Adding to the optimism were hopes that trade conditions will improve later this year thanks to recent commitments by the department of trade, industry and competition to address fair trade protections.
Last month, trade, industry and competition minister Parks Tau moved to ease antitrust laws by exempting industries “in distress” due to persisting “macroeconomic challenges” from certain sections of the Competition Act.
It was the latest in a series of policy interventions for the local steel sector, with the International Trade Administration Commission of South Africa (Itac) last year launching its most extensive steel policy review in more than 20 years in a bid for a regulatory overhaul aimed largely at keeping Amsa’s long steel unit afloat.
At stake are 3,500 jobs in KwaZulu-Natal and Gauteng. The operations closed last year, laying off their huge workforces amid persistently high electricity costs and Asian competition.
Amsa reported a narrowing in its headline loss to R3.36bn for the year to end-December, from a R5.1bn loss a year ago.
Fixed costs were stable at R6.8bn, but sales volumes were down 12% year on year at 2-million tonnes, thanks primarily to a slump in crude steel production. Revenue declined by 16% to R32.29bn.
“International overcapacities continue, with China’s output at a seven-year low but exports at an historic high,” said the group.
Chinese competition helped push the realised rand steel price down 5% during the period under review. The weaker dollar, which makes imports more affordable and weighs on the competitiveness of local exporters, added to the pressure.
“The current rand strength against the dollar represents a material risk to the 2026 H1 outlook,” said the company.
Three months ago, Amsa rejected the IDC’s R8.5bn offer to take over its long steel division in Newcastle and Vereeniging, according to reports by Bloomberg. The state-owned group holds about 8% of Amsa.
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