Although AMSA has collaborated with various stakeholders throughout 2023 seeking solutions, they acknowledged that these initiatives may not address the structural challenges facing the industry. File photo
In a move that could stave off a looming crisis in South Africa's steel sector, government and industry sources have confirmed that negotiations are advancing regarding a significant R1 billion rescue package for ArcelorMittal South Africa (AMSA).
This initiative, which emerged partially from discussions at the recent World Economic Forum (WEF), aims to salvage the company's longs steel operations, potentially protecting around 100 000 downstream jobs that hang in the balance.
Officials from the Department of Trade, Industry and Competition (the dtic) have stated that Minister Parks Tau has assured meetings with AMSA’s Group CEO, Lakshmi Mittal, during the recently-concluded WEF Annual Meetings in Davos, Switzerland.
While the specifics of the deal remain under wraps, sentiments from financial sources suggest optimism regarding the Newcastle plant’s future.
“Yes, there is credence to the reports. That plant (Newcastle) is not going to close down, there are discussions and things underway. It is a question of when the announcement will be made,” a source within the financial circles disclosed.
This optimism was echoed by the dtic representatives, who noted that various meetings were ongoing but without a set timeline for an official announcement.
“There is no indication of the timelines yet, ther are just a series of meetings and discussions,” they said.
High-ranking officials—including Finance Minister Enoch Godongwana, alongside Tau and Electricity Minister Kgosientsho Ramokgopa—have engaged directly with Mittal to explore options to avert an impending shutdown that could impact approximately 3 500 direct and indirect jobs.
Earlier communications from AMSA indicated that, due to rising energy costs, logistical constraints, and complications surrounding an export scrap tax, the company was bracing for a shutdown of its steel production by late January 2025, with operations winding down completely in the first quarter of the year.
Although AMSA has collaborated with various stakeholders throughout 2023 seeking solutions, they acknowledged that these initiatives may not address the structural challenges facing the industry.
The closing of key longs steel plants, such as those in Vereeniging and Newcastle, would also cease the production of specialized steel products, thereby increasing costs for local manufacturers.
This scenario poses a significant threat, not only to jobs within AMSA but also to South Africa's overall competitiveness in the manufacturing sector.
As negotiations continue to unfold, the stakes for both the steel industry and the broader economy are exceedingly high. With hopes for a rescue package at an advanced stage, stakeholders await further developments, keenly aware that the next few months could be crucial for the future of hundreds of thousands of jobs tied to the steel industry's fortunes.
Tshepo Ramodibe, head of corporate affairs at the Industrial Development Corporation, one of AMSA’ creditors, said the entity was actively engaging with relevant stakeholders to find a workable solution.
“These engagements are ongoing,” he said.
BUSINESS REPORT