ArcelorMittal South Africa seeks funding to delay the closure of its long steel business, impacting 3,500 jobs. Efforts are under negotiation with the government for financial support, with reported operational losses of R1.1 billion. The company aims to receive R3 billion to maintain operations and has requested several regulatory changes for financial relief.
ArcelorMittal South Africa is currently engaged in negotiations with the government and other stakeholders to secure financial support aimed at postponing the anticipated shutdown of its long steel business. Initially announced in February, the closure of this division, which manufactures essential materials like fencing, rail, rods, and bars, is set to occur by April due to ongoing challenges in demand and infrastructure concerns.
The impending closure is expected to impact 3,500 jobs and disrupt various industries. ArcelorMittal reported that its operational loss for the long steel segment increased to R1.1 billion in 2024, resulting in a headline loss of R5.1 billion for the year ending December 31. The company emphasized the importance of reaching an agreement on funding to defer the wind-down of operations.
A statement from the company noted, “Without agreement regarding the funding and related matters, the deferral of the wind down of the longs business will not be feasible.” It is critical for the company to manage the wind-down process while maintaining discussions over funding.
Originally, the decision to close the long steel products division was made in January 2025, with steel production ceasing first and complete shutdown expected by the end of Q1 2025. The South African Government has proposed initial support of R500 million to assist with steelworker salaries for a duration of six to eight months, as reported by Bloomberg.
Additionally, discussions regarding bridge financing with the Industrial Development Corporation (IDC) are underway, which could lead to an increase in its stake in the company, currently at 8.2%. Both the IDC and the government are promoting the exploration of buyers for the soon-to-be-closed mills in Vereeniging and Newcastle, as their continued operation is critical to the country’s economic recovery plan.
To sustain operations for an additional year and build inventory for major car manufacturers such as Volkswagen and Isuzu Motors, ArcelorMittal is seeking approximately R3 billion. Moreover, the company has requested the removal of an export tax on scrap metal, the establishment of import duties, and reductions in electricity and freight rail costs, according to Reuters.
In conclusion, ArcelorMittal South Africa is negotiating for financial assistance to delay the closure of its long steel business, a move that could prevent significant job losses and economic disruption. The company faces substantial operational losses, with support from the government and the IDC being instrumental in sustaining operations. Furthermore, the request for regulatory changes and financial help underscores the urgency of the situation as the government aims to revitalize the economy.
Original Source: www.mining-technology.com
