In a devastating blow to the local economy, ArcelorMittal South Africa (AMSA) has announced its decision to fully idle its long-steel plants in Newcastle, resulting in the loss of approximately 3,500 direct jobs.
The company had initially planned to implement the wind-down of its longs-business in late January but postponed the decision to accommodate outstanding orders and sustain talks with the South African Government. However, these rescue talks have failed, and AMSA has confirmed that it will begin shutting down its blast furnaces in the first week of March, with steel production expected to cease by early April.
In a statement, AMSA expressed its disappointment at the outcome, stating that despite engaging with stakeholders and government bodies, no viable options were found to avoid the wind-down. “Regrettably, despite our best efforts, the parties involved have not been able to find timely solutions required to defer the wind down of the longs business,” read the statement.
The closure of the plant is expected to have a significant impact on the local community, with many businesses relying on the plant for steel supplies. AMSA’s chief executive officer, Kobus Verster, highlighted the concerns that led to the decision, including the scrap Price Preference System and export tax on scrap, port and rail efficiency, the lapsing of provisional safeguards on Hot Rolled Coil, their application for a negotiated pricing agreement with Eskom not being supported, and a looming electricity tariff hike set to go into effect on 1 April.
Verster said the Vereeniging and Newcastle mills, which indirectly support more than 100,000 jobs, supply between 350,000 tons and 400,000 tons of steel products that can’t currently be manufactured by any other companies in South Africa.
Verster expressed his disappointment at the outcome, stating that the decision would have a significant negative impact on the economy, jobs, and the local community. “AMSA is deeply disappointed that our efforts over the last year have not translated into a sustainable solution, resulting in a significant negative impact on the economy, the loss of approximately 3,500 direct and indirect jobs, and a detrimental impact on the local community in Newcastle.”
Pietermaritzburg and Midlans Chamber of Business CEO Melanie Veness echoed these sentiments, stating that the closure would have a huge negative impact on workers and communities. “This is big, from a job perspective but also a sustainability of companies point of view.”
With more than 2,000 of the expected job cuts coming from Newcastle alone, many in the community are concerned about the future. Newcastle businessman Marius Pretorius said there is uncertainty about where to go from here. “Nobody can tell us when, what, and how,” he said.
