ArcelorMittal announces closure of loss-making long steel business in South Africa
New Delhi| Steel producing company ArcelorMittal South Africa Limited on Monday announced that it is closing its loss-making long steel business in the country. The move is likely to affect some 3,500 direct and indirect jobs.
The company was planning to shut down operations since November due to long-term weak economic conditions, logistics and energy challenges, and cheap steel imports from China. After this announcement by ArcelorMittal, the company’s shares saw a decline of up to 15 percent.
The statement said that the company is at a point where any further delay could affect the stability of the company and hence the decision to stop long steel production in South Africa cannot be postponed further. It is the moral and legal duty of the board and management of ArcelorMittal South Africa to ensure that the overall business remains sustainable in the long term.
The statement further said that the company appreciates the support received from the government and other stakeholders and some progress has been made in the initiatives taken to stop this, but these are not enough.
ArcelorMittal South Africa stated that Newcastle Works had suffered from persistently high logistics and energy costs, inadequate policy interventions (particularly policy decisions made some time ago) leading to substantial subsidization of scrap-based steelmaking operations. Due to this the Longs Steel business has become unstable.
The company said that despite all efforts, the package of initiatives sought has not reached a level that can address the structural problems being experienced by the company in the longs business. By the end of the year, the company had no choice but to close the Longs business.
The company further stated that market conditions had deteriorated in the fourth quarter of 2024 due to severe pressure on global steel demand and prices, which hurt the financial performance of the entire ArcelorMittal’s South Africa business.
