ArcelorMittal South Africa (AMSA) plans to wind down its long steel operations, affecting nearly 3,500 jobs. The plants to be impacted are Newcastle Works, the Vereeniging Works and the rolling mills that use Newcastle material as feedstock, notes Kallanish.

Over the past few years, the company has implemented cost saving initiatives, improved raw material cost savings, made asset footprint adjustments, and implemented various other productivity initiatives. However, this did not improve the trading environment in the country, AMSA says.

Over the last seven years, low GDP growth has led to a 20% fall in South African apparent steel consumption to 4 million tonnes/year. In contrast, transport, energy, and logistics costs have soared, exacerbated by logistics failures, particularly in rail and port services (Transnet). Due to the scrap export ban, meanwhile, scrap-consuming electric arc furnace steelmakers have been given an “artificial” competitive advantage over iron ore-based steelmakers, AMSA observes.

The firm therefore had “no option” but to embark on a process to wind down its longs business, which for now may be placed in care and maintenance, AMSA notes.

AMSA chief executive Kobus Verster comments: "The board and management of AMSA have reached this point after exhausting all possible options. As difficult as these circumstances are, we have a duty to ensure that the business is sustainable for the long term in the interests of the company and its stakeholders. Following the wind-down, the remaining business will be on a more sustainable financial footing. It will be able to invest the appropriate capital in product development and available growth opportunities."

AMSA posted a 5% on-year decrease in first-half-of-2023 revenue to ZAR 21.04 billion ($1.2 billion). South Africa's biggest steelmaker reported a headline loss of ZAR 448m compared to earnings of ZAR 3.02 billion in H1 2022. Ebitda was ZAR 499m, plummeting 86% from a year earlier.