South Africa's government, labour unions, steel sector participants, and customers have expressed concerns regarding the negative impact of ArcelorMittal South Africa (AMSA)'s decision to wind down its long products division operations. 

AMSA announced in November it would close its longs operations over a slow economy and challenging trading environment, high transport and logistics costs, high energy prices, logistic failures, and electricity challenges. Moreover, due to the country’s scrap export ban, scrap route steel producers have a cost advantage against iron ore-based producer AMSA. 

Talks are underway to prevent the closure; however, reaching a solution seems challenging, Kallanish notes.

"Reversing the closure decision holds substantial risks and requires the commitment of, at a minimum, the Company, its customers and suppliers, the Government, state-owned enterprises, and our employees. ArcelorMittal South Africa expects to be in a position to make a further announcement regarding the Company's Longs Business in the near future," says AMSA. 

Due to the impairment charge relating to the company's long steel operations, the company's 12-month headline loss per share in 2023 stood between ZAR 1.55 and 1.85 ($0.082-0.098) from the year-earlier profit of ZAR 2.36 per share.

"AMSA reiterated that it did not need any preferential treatment or subsidies. Rather, it required the Government to ensure that a level playing field exists for South Africa's primary steel producers by addressing the structural constraints affecting the steel industry,” the firm concludes.

AMSA will release its condensed financial statement on 8 February.