ArcelorMittal South Africa (AMSA), the largest steel producer on the continent, has announced plans to wind down its long steel products operations at its Newcastle and Vereeniging plants, as well as its rail and structural subsidiary, Amras.

This decision, initially scheduled to take effect at the end of January 2025, threatens approximately 3,500 direct jobs and poses a significant risk to an estimated 100,000 additional jobs across various industries that rely on local steel production.

The closures are attributed to several challenges, including weak economic conditions, high production costs, and increased competition from low-cost steel imports, particularly from China. These factors have rendered the long steel business financially unsustainable. AMSA reported a headline loss of 5.1 billion rand for the year ending December 31, 2024, a significant increase from the 1.89 billion rand loss reported in 2023.

The potential shutdown has raised alarms across South Africa’s manufacturing sector, which is already grappling with stagnant growth and escalating operational costs. Construction, mining, and automotive manufacturing heavily depend on domestically produced long steel products. The National Association of Automotive Component and Allied Manufacturers (NAACAM) expressed concern that the closure could lead to production line stoppages due to insufficient steel supplies, adversely affecting the stability and competitiveness of the automotive sector.

In response to the impending crisis, the South African government has engaged in emergency discussions with AMSA to explore potential solutions.

These talks have led to a temporary postponement of the plant closures, extending operations by one month to allow for further negotiations and an assessment of unexpectedly high orders. A 380 million rand loan from the Industrial Development Corporation of South Africa has facilitated this extension.

This situation underscores the critical need for strategic interventions to support the domestic steel industry. Without such measures, South Africa risks increasing its reliance on imported steel, which could exacerbate trade deficits and undermine local industries. The outcome of the ongoing negotiations between AMSA and the government will be pivotal in determining the future trajectory of the country’s manufacturing and industrial sectors.

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