ArcelorMittal South Africa is negotiating with the government for financial support to delay the closure of its long steel business, which is facing operational losses and potential job impacts. The government has proposed preliminary financial aid, and discussions are ongoing regarding further support and operational adjustments.
ArcelorMittal South Africa is currently in negotiations with government entities and other stakeholders to secure financial assistance aimed at delaying the anticipated closure of its long steel business. Initially disclosed in February, the plan to shut down operations, which manufacture fencing, rails, rods, and bars, is set to occur by April, following unproductive discussions with government officials.
The closure, projected to impact 3,500 jobs and disrupt several industries, has been attributed to diminished demand and infrastructural challenges. The company’s operational losses for this division have escalated to R1.1 billion in 2024, part of a headline loss of R5.1 billion for the fiscal year ending on December 31.
ArcelorMittal communicated, “ArcelorMittal South Africa is engaging with stakeholders, including government, regarding funding and related matters to enable the deferral of the wind down of the longs business.” They emphasized that without an agreement concerning funding, the postponement would not be feasible and that the wind-down process is ongoing while discussions persist.
The initial announcement regarding the closure of the long steel division was made in January 2025, with steel production ceasing first and remaining operations projected to close by the end of the first quarter of 2025. According to Bloomberg, the South African Government has offered approximately R500 million to cover steelworker salaries for six to eight months as part of this support.
Discussions for additional bridge financing involve the Industrial Development Corporation (IDC), which may enhance its stake in ArcelorMittal from the existing 8.2%. The IDC and government are also encouraging the company to review offers for the two mills earmarked for closure in Vereeniging and Newcastle. Keeping these mills operational is pivotal for the government’s initiatives to revitalize the economy through infrastructure investments along with supporting the automotive and mining industries, vital contributors to foreign currency revenues.
To sustain operations for an additional 12 months while building inventory for major customers such as Volkswagen and Isuzu Motors, ArcelorMittal seeks approximately R3 billion in funding. Additionally, the company requests the removal of export taxes on scrap metal, implementation of import duties, and reductions in electricity and freight rail costs to enhance operational viability.
In conclusion, ArcelorMittal South Africa is actively seeking financial support to postpone the closure of its long steel business, which poses significant economic risks and job losses. The company’s ongoing discussions with governmental bodies and stakeholders highlight the urgency of this situation, as maintaining the mills is essential for economic revival in various sectors. The proposed funding and strategic adjustments are crucial for the retention of jobs and the long-term sustainability of the organization.
Original Source: www.mining-technology.com
