ArcelorMittal South Africa is set to close its long-steel operations, affecting 3,500 jobs, with production expected to stop by month-end. The decision follows a decline in the steel market and increasing imports, amid high operational costs. CEO Kobus Verster expressed disappointment over unresolved industry challenges. The government hopes to revive the struggling economy, which has seen consistent low growth.
ArcelorMittal South Africa has announced plans to shut down its long-steel business, a decision impacting approximately 3,500 employees. Steel production is expected to cease by the end of the month; however, the final count of job losses remains undetermined. This closure follows a previously delayed announcement made in February, which was postponed to allow further consultations with government officials and state-owned freight companies. The company cites a significant downturn in both global and local steel markets, in addition to rising costs and increased low-cost imports from countries such as China, as contributing factors to the decision.
Chief Executive Officer Kobus Verster expressed disappointment that the company’s efforts over the past year had not resulted in a sustainable resolution to the ongoing challenges facing the industry. He noted that attempts were made to address the structural issues plaguing the South African steel sector but ultimately fell short. The closure of this business poses a setback to the South African government’s attempts to rejuvenate its struggling economy, which has seen minimal growth over the past decade.
Furthermore, the company anticipates reporting a larger financial loss for the year ended December. It projects that the headline loss per share will fall between 4.06 rand and 4.41 rand, a significant increase from 1.70 rand recorded in the previous year.
The announcement from ArcelorMittal South Africa regarding the closure of its long-steel business comes at a time when the South African steel industry faces unprecedented challenges. The sector is experiencing its most severe crisis since the financial downturn of 2008 due to a combination of high operational costs, a slump in demand, and an influx of cheaper steel imports, particularly from China. Government consultations aimed at finding solutions have not yielded the necessary support for the industry, making this closure a critical point for both the company and the wider economic landscape in South Africa.
In conclusion, ArcelorMittal South Africa’s impending closure of its long-steel business is a substantial blow to the industry and local employment, jeopardizing 3,500 jobs. The company’s struggle amidst deteriorating market conditions highlights the ongoing challenges faced by the South African steel sector, further compounded by economic stagnation. The anticipated financial losses for the current year underline the depth of the crisis, revealing the urgent need for effective policies to revitalize the country’s industrial base.
Original Source: m.economictimes.com
