ArcelorMittal to Cease Operations of Unprofitable Long Steel Division in South Africa, Affecting 3,500 Jobs
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Johannesburg, Jan 6 (NationPress) Steel manufacturer ArcelorMittal South Africa Ltd disclosed on Monday that it will be discontinuing its unprofitable long steel operations in the nation, a decision expected to affect approximately 3,500 direct and indirect jobs.
The decision to halt operations has been under consideration since November due to ongoing weak economic conditions, logistics difficulties, and a surge of inexpensive imports from China. Following the announcement, the company's shares plummeted by as much as 15 percent during early trading.
“The organization has reached a stage where any further postponement could jeopardize its sustainability, and thus, the decision cannot be delayed any longer. The Board and Management of ArcelorMittal South Africa are obligated to ensure the long-term viability of the overall business,” the company stated in a press release.
While the company acknowledges the backing from the Government and other stakeholders, and noted some progress with the identified initiatives, these efforts have not proven sufficient, the statement clarified.
ArcelorMittal South Africa indicated that ongoing elevated logistics and energy expenses, coupled with inadequate policy measures, particularly those established some time ago regarding the significant subsidization of scrap-based steelmaking operations, have rendered the Longs Business unfeasible.
Despite various attempts, unfortunately, the set of initiatives desired has not developed to a degree that would rectify the fundamental structural issues the company has faced in its Longs Business, the firm commented.
By the end of the year, the company found no option but to initiate the winding down of the Longs Business, focusing on a carefully considered and responsible approach to minimize effects on employees and stakeholders while ensuring the sustainability of its remaining operations.
Moreover, market conditions deteriorated in Q4 2024, with global steel demand and prices facing intense pressure, which adversely impacted the financial performance of the entire ArcelorMittal South Africa operation, the statement noted.
