ArcelorMittal South Africa is negotiating with the government for funding to delay the closure of its long steel operations, initially scheduled for April 2024. The closure, which impacts 3,500 jobs, follows poor demand and financial losses in the division. The company has also requested policy changes concerning scrap metal taxes and operating costs to improve competitiveness.
ArcelorMittal South Africa has initiated discussions with governmental authorities and other stakeholders concerning financial support that could potentially delay the closure of its long steel operations. Initially announced on February 28, the cessation of production for long steel products such as fencing materials, rails, rods, and bars was scheduled for April this year, following unsuccessful negotiations with the government.
In an official statement, the company expressed: “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.” Although the wind-down processes are ongoing, they are being managed to facilitate discussions around securing funding.
The firm emphasized that the deferral of operations hinges upon successful negotiation of financing arrangements: “It should be noted that without agreement regarding the funding and related matters, the deferral of the wind down of the longs business will not be feasible.”
In addition to funding requests, ArcelorMittal has urged the government to eliminate an export tax on scrap metal, citing that it unfairly advantages recyclers. Moreover, the company seeks to impose import duties and lower electricity and rail freight costs to bolster its competitive position.
A spokesperson for South Africa’s industry ministry confirmed ongoing discussions with ArcelorMittal and other industry stakeholders, stating, “Government is engaged on saving the jobs.” The planned closure, first revealed in November 2023, is attributed to lackluster demand and ongoing infrastructure challenges, with an anticipated impact on approximately 3,500 jobs directly and indirectly.
The operational loss for ArcelorMittal South Africa’s long steel division escalated to 1.1 billion rand ($60.56 million) in 2024, up from 600 million rand the previous year. The overall financial report revealed a headline loss of 5.1 billion rand for the year ending December 31, compared to a 1.89 billion rand loss in 2023, primarily due to poor performance in the long steel segment and an influx of low-cost steel imports, especially from China.
ArcelorMittal South Africa is actively seeking funding to postpone the closure of its long steel operations, which has faced persistent financial losses and market challenges. The proposed closure threatens thousands of jobs and could negatively impact various sectors, including automotive and construction. The outcome of these funding discussions appears critical to the future of the long steel business and the workforce’s stability.
Original Source: www.marketscreener.com
