ArcelorMittal South Africa to shut down operations in South Africa in Q2

Negotiations with the government were unsuccessful, and the business environment deteriorated

ArcelorMittal South Africa (AMSA) will stop production of long products at its facilities in South Africa in the second quarter of this year as negotiations with the government on a rescue package have failed. This was reported by Bloomberg.

This step will lead to the loss of about 3.5 thousand direct and indirect jobs, the company said in a statement. The original plan to close the plants by the end of January was postponed for a month to fulfill the order.

AMSA plans to start shutting down blast furnaces in the first week of March and stop steel production by early April.

According to the company, the enterprises are not viable due to poor railroad connections, high electricity tariffs, a flood of cheap imports and government policies that artificially keep prices for steel scrap used as raw materials by smaller competitors low.

“Regrettably, the parties have not been able to find timely solutions required to defer the winddown,” ArcelorMittal South Africa said in a statement.

It is reported that some conditions have “not only remained unchanged but have deteriorated” since the start of negotiations. Thus, the country’s main energy company intends to raise prices by almost 13% from April 1, and the state-owned ports and railways also propose to increase tariffs.

Earlier, Kobus Verster, AMSA’s CEO, said that Newcastle Works and Vereeniging Works supply 350-400 thousand tons of steel products that no other company in South Africa can produce.

The planned closure has worried other companies that rely on these facilities to supply steel for their own operations.

As GMK Center reported earlier, the South African government was discussing a rescue package worth up to R1 billion ($53.6 million) to prevent the closure of ArcelorMittal South Africa’s plants.