Online Reporter
Johannesburg-listed subsidiary of Lakshmi Mittal’s multinational group said steel production will likely cease by the end of the month.
That could potentially affect about 3 500 jobs, though the final number has yet to be determined, it said. The firm’s shares fell as much as 15 percent in early trading.
The move will come as a blow to South Africa’s business-friendly coalition government, seeking to revive an economy where growth has been outpaced by an increasing population over the past decade.
Persistently high logistics and energy costs, coupled with insufficient policy interventions by the South African government, made the operations unsustainable, the company said in a statement yesterday. ArcelorMittal said the country’s steel industry is facing its “greatest sustained challenge” since the 2008 financial crisis. Deteriorating markets and cheap imports, particularly from China, have damaged the business, it said.
“We are disappointed that all our efforts over the last year have not translated into a sustainable solution,” Chief Executive Officer Kobus Verster said.
The wind-down will hit both the company’s Newcastle and Vereeniging plants, as well as the AMRAS rail mill. A scaled-back coke-making operation at Newcastle will continue, reflecting reduced demand for the product, it said.
The company announced its decision to shutter the business in November 2023, but temporarily delayed the closure after consulting with the government and state-owned freight firm. — Bloomberg.
