ArcelorMittal to Shut Steel Production Plants

In a blow to the local Steel production industry in South Africa, ArcelorMittal South Africa Ltd, a subsidiary of Lakshmi Mittal’s multinational group is set to close its business making long-steel production plants in Newcastle and Vereeniging in South Africa that will have an impact of over 3500 jobs.

The closures are to proceed despite months of consultations with the government that failed to produce any results that would circumvent the business shutting the plants.

ArcelorMittal said that steel production will stop at the end of January with a final winding down of assets and staff at the plant that may take longer.

Production to Halt end of January 2025

The move comes as a blow to South Africa’s newly formed coalition government, that has been seeking to revive a moribund economy where growth has been limited to under half-a-percent in the past year, and where the official unemployment rate stands above 32%.

Increasingly high transport costs driven by one of the regions highest fuel prices and high inflation on energy costs, coupled with insufficient policy interventions by the South African government, produced an environment where the business was unsustainable, according to statements made by the company today (6 December). ArcelorMittal said the country’s steel industry is facing its “greatest sustained challenge” since the 2008 financial crisis. Deteriorating markets and cheap imports, particularly from China, have damaged the business, it said.

Negotiations Failed to Stop Closures

“We are disappointed that all our efforts over the last year have not translated into a sustainable solution,” Chief Executive Officer Kobus Verster said. 

The closures are expected to have a massive knock-on effect in the regions of both plants. Newcastle and Vereeniging plants, as well as the AMRAS rail mill where communities in the area depend on these large employers that drive a fair bit of the local economy there. A scaled-back coke-making operation at Newcastle will continue, reflecting reduced demand for the product, it said. 

The company announced its decision to shutter the business in November 2023, but temporarily delayed the closure after consulting with the government and state-owned freight firm Transnet in an effort to keep the production plants open. 

Share Price Tumbles

ArcelorMittal South Africa has stated it expects its losses to have increased in the past year and that its loss per share is likely to range from -4.06 rand to -4.41 rand compared with 1.70 rand a year earlier, it said. 

The company’s share price fell as much as 22% in trade on the JSE today.