JOHANNESBURG: More than 3,500 employment will be impacted when ArcelorMittal South Africa Limited (AMSA), the local arm of British steel tycoon Lakshmi Mittal, who was born in India, shuts down its long-standing steel mills in the nation.

Following an earlier agreement with the government to postpone the closure while possible options were investigated, AMSA just released this notice.

In November 2023, AMSA made the decision to put its long-standing steel industry into care and maintenance because of the persistently poor economic climate, energy and logistical issues, and unsustainable competition from low-cost imports, particularly from China.

“As a business, we are sad that despite our best efforts over the last year, no long-term solution has been found. According to CEO Kobus Verster, the problems put forth for resolution aimed to level the playing field against both domestic and foreign rivals.

The variables that might have and still can effectively solve the structural concerns in the South African steel industry were highlighted in the issues mentioned. This is notably true for our (long steel) business, but it also applies to the company, the South African steel industry, and the value chain.

“We had hoped that matters would not have come to this conclusion, at a time when our country can ill-afford job losses and the further erosion of industrial capacity,” he said.

According to Verster, AMSA had worked closely with stakeholders, including the government and labor, to investigate options for maintaining the long-standing steel industry after they expressed concerns about the possible loss of high-quality local steel production and the socioeconomic effects on (the town of) Newcastle and its surrounding communities.

The corporation asked for governmental help to overcome structural restraints hurting the steel industry, but it did not seek subsidies.

Throughout 2024, operations were prolonged to provide time for obtaining solutions as part of ongoing efforts to postpone closure via focused short- and long-term interventions.

“While the company appreciates the support from government and other stakeholders, and having made some progress with the identified initiatives, these have not been adequate,” AMSA said.

The business said that in spite of everything, the set of initiatives it had hoped to implement had not come to fruition to the extent that it would have improved its circumstances.

The firm emphasized the need of governmental interventions to establish fair competition in the steel sector and noted continuous interaction with the government since December 2023 to address structural concerns impacting the business.

Following the announcement of Chinese stimulus measures, there were brief indications of a rebound in global steel prices.

The Company has no choice but to wind down the Longs Business by year’s end, with a focus on a prudent and well-thought-out procedure to minimize the effect on stakeholders and workers while maintaining the viability of its other activities,” AMSA said.

AMSA maintained its belief that the remaining components of its steel plant operations could be effectively reorganized to become profitable, sustainable, and competitive.

Newcastle will continue to produce coke, but on a smaller scale in response to the decline in demand.

With the wind-down of the remaining manufacturing processes finished in the first quarter of this year, steel production is expected to stop by late January 2025.

In November 2024, South Africa produced 4.42 million tonnes of crude steel, a 2.3% decrease from the previous year, according to a study released by the South African Iron and Steel Institute (SAISI).

The amount of crude steel produced this year is probably going to be around 30% less than that of 2018, putting South Africa below Egypt and Algeria in the African rankings.

Several countries, like Tanzania, Kenya, and Zimbabwe, are bolstering and growing their steel industry at a fast pace.

Mittal helped bring around the former state-owned steelmaker Iscor before finally purchasing it, giving rise to AMSA.