The National Union of Metalworkers of South Africa (NUMSA) has raised alarm over troubled steelmaker ArcelorMittal South Africa’s (AMSA’s) decision to shut down its Newcastle and Vereeniging Works, warning that the closures would “spell disaster” for local communities and the country’s manufacturing sector.

NUMSA secretary-general Irvin Jim said the closures would be a blow to South Africa’s industrialisation efforts.

“Protecting the current capacity for manufacturing is crucial to drive the much needed manufacturing and industrialisation of our country, so that we can protect existing jobs, create new jobs that we desperately need and stimulate economic growth,” he said in response to AMSA’s announcement of the Newcastle Works closure.

AMSA CEO Kobus Verster on Monday announced that the initiation of a section 189 consultation process, which will affect about 35% of the company’s workforce, including those at Newcastle Works, Vereeniging Works and ArcelorMittal Rail and Structures, as well as certain roles in the Flat Steel Business, Corporate Office and Care Support Services.

NUMSA had urged government to convene discussions with key stakeholders in the steel and engineering sectors to address the issues raised by AMSA management about its challenges.

“These engagements should include the automotive sector and the components value chain to discuss the details and the claims made by AMSA that it is operating under unbearable uncompetitive conditions,” said Jim.

“Government led by the Department of Trade, Industry and Competition (DTIC) and the entire economic cluster must be involved because it is related to Eskom and Transnet,” he stated.

The union expressed frustration over the lack of progress from year-long negotiations between AMSA, the DTIC and the government economic cluster, including Presidency, on plans to close the steel plant.

“We are demanding that the Office of the Presidency give a public account about what they cannot agree on regarding the demands made by AMSA.

“We need to understand the bigger picture so that we can act to protect this capacity, which in our view cannot be destroyed,” Jim said.

He warned that the closures would extend beyond immediate job losses, potentially crippling downstream industries, including the automotive sector and the component value chain.

NUMSA would continue to engage with the AMSA management and government to find a viable solution.