ArcelorMittal South Africa has decided to close its Longs Business, which may result in the loss of about 3,500 jobs at the Newcastle Works, Vereeniging Works, and the rail and structures subsidiary, AMRAS. This decision follows continuing weakness in local and international steel markets.
“Steel production is anticipated to cease by late January 2025, with the wind-down of the remaining production processes completed in the first quarter of 2025. Discussions are underway to realign the R1 billion working capital facility secured in 2024 to support this transition,” the steel-making group sid in a statement.
The coke-making operations at Newcastle will continue, although they will be scaled back to reflect lower demand, the company said on Monday morning.
It had warned shareholders in October about anticipated losses for the third quarter, driven by poor financial performance in the Longs Business. The main reasons cited include deteriorating global and local steel markets, high energy and logistics costs, and a surge in low-cost steel imports, particularly from China.
Since December 2023, the company has been in discussions with the government to address structural issues affecting the Longs Business and to help formulate policies that create a level playing field in the steel industry.
Despite these talks, the group said the financial situation in the fourth quarter had remained challenging. Initial signs of recovery in international steel prices, along with significant cost-cutting and cash management measures, had not alleviated the difficulties. As a result, the financial performance for the 2024 financial year is projected to be “substantially weaker” compared to 2023.
“The company is at a point where any further delay could affect its sustainability...a decision cannot be postponed any longer. The board and management have no option but to take the difficult decision to proceed with the wind-down of the Longs Business, which will be placed into care and maintenance, subject to the consultation process outlined below,” the company said..
The board and management expressed confidence that the remaining business could be successfully restructured to be competitive, sustainable, and profitable.