ArcelorMittal confirms full closure by Q2 of 2025
Government could not help embattled steel producer ArcelorMittal, which confirms full wind down of operations from April 2025 …
It’s sad news for manufacturing in South Africa as ArcelorMittal finally announces closer of its steel business. Following consultation with government and Original Equipment Manufacturers (OEMs), primarily in the automotive industry, 3 500 direct jobs will be lost, reports The Citizen.
Last month The South African reported how only government intervention could save the embattled steel producer. However, the seemingly inevitable has been announced, following a delay to fulfil its higher-than-anticipated outstanding order book. Unfortunately, the wind down of ArcelorMittal could not be worse timed considering threats of US sanctions and potential cessation of AGOA trade benefits.
ARCELORMITTAL SOUTH AFRICA CLOSURE
According to ArcelorMittal, ongoing engagement with government has not found a solution to its problems despite extensive discussion. “Regrettably, despite our best efforts, parties involved have not been able to find timely solutions required to defer the winding down of the long steel business,” ArcelorMittal said in a statement, listing the following issues:
- Scrap export tax remains in place and unfairly disadvantages ArcelorMittal.
- No progress has been made on improving port and rail efficiencies. And Transnet declined to renegotiate improved tariffs.
- ArcelorMittal’s application for a negotiated pricing agreement with Eskom was not supported and no progress made.
- Implementing trade measures were implemented as anticipated.
COST OF DOING BUSINESS TOO HIGH IN SA
Eskom electricity costs are set to increase by 12.74% from 1 April 2025, which it says will further undermine competitiveness. And proposed Transnet tariff increases will further elevate logistics costs that are already uncompetitive by international standards. ArcelorMittal said despite repeated submissions of the adverse impacts of current policies, it received no formal communication from the Department of Trade, Industry and Competition and the National Treasury regarding a review.
“This continued inaction, combined with deteriorating cost structures, gives the board and management of ArcelorMittal South Africa no option but to implement the final winding down of business. The shutdown of the blast furnace will commence in the first week of March with the last steel form produced by late March or early April. And the final winding down into care and maintenance should be fully implemented during Q2 of 2025,” concluded CEO of ArcelorMittal South Africa Kobus Verster.
WHAT DO YOU THINK OF THIS MAJOR CLOSURE IN SA?
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