The looming closure of steelmaker ArcelorMittal South Africa’s (AMSA’s) long-steel plants in Vereeniging, Gauteng, and Newcastle, in KwaZulu-Natal – while temporarily postponed for the month of February – is set to result in 3 500 people losing their jobs.

Professional body Hot Dip Galvanising Association South Africa (HDGASA) executive director Robin Clarke believes that various manufacturers, mines and other industry players will be affected by this closure, as well as more than 100 000 residents in those communities, especially those who are part of the downstream steel supply chain.

The overall situation remains in flux, with discussions continuing ‘behind closed doors’ between AMSA, government and steel industry associations representing the interests of the downstream steel sector – as well as labour unions and affected local communities.

“In light of this, my comments on behalf of the HDGASA therefore reflect both the ongoing uncertainty and the potentially damaging outcomes should AMSA forge ahead with its decision to shut down these operations,” Clarke emphasises.

He points out that, should the proposed closures go ahead, the loss of AMSA’s long-steel facilities will also see the loss of the steel sector’s skills base, making it difficult to produce specialty steels.

“Government’s inability to facilitate economic growth in the steel industry has led to an over-reliance on ‘import culture’ and may well lead to the de-industrialisation of the South African economy,” he adds.

The increased reliance on imported steel products continues to put the steel industry and AMSA’s operationality at risk – to such an extent that industry players are calling on government to implement import tariffs, invest in solutions that alleviate logistics- related issues at ports, and invest in transport and other key infrastructure.

“We need to return to the mindset and scenario of 2010 to 2012, when stadiums, airports and other facilities were being built and both the construction and steel sectors were thriving. “We need to build the bridges, install the power lines, fix the water supply, build schools and hospitals, and create volume and a fair and balanced economy – where natural market forces will determine who thrives, strives and survives,” he posits.

However, the boosting and growth of the steel sector depends on an environment that facilitates economic growth, job creation, skills development and reasonably priced, “high-quality” steel products that are manufactured and refined locally.

This is because imported steel products may not always be of a quality that local galvanisers require from steel product manufacturers and other downstream steel sector players.

“The manufacturer and the galvaniser do not want to pay for excessive zinc pick-up; and the galvaniser does not want to be criticised for producing an overly coarse finish because the steel is highly reactive or of poor quality,” adds Clarke.

Imported steel products also pose other challenges, including late deliveries and incorrect product specifications or being in the incorrect condition. This, in turn, results in commercial and infrastructure projects being delayed and, consequently, hampers the development of a successful steel sector.

“It is impossible to reduce our reliance on imported product unless we build up a competitive industry that can compete with imports. The current crisis within the steel sector is not just about AMSA, but about whether the steel sector in South Africa can win despite international competitors; considering local infrastructure shortcomings, incorrect labour practices, red tape and even the lack of export incentives – which are all challenges.

“All we can do is try to be competitive through innovation. This is about price and quality – as well as about the steel value chain being enhanced by retaining specialist skills and doing research and development around specialist steel and steel products,” Clarke observes.

For these reasons, the HDGASA has lobbied government to create a more sustainable environment by investing in the local steel sector and reducing the reliance on imports. The HDGASA has also worked in close collaboration with the Newcastle Crisis Committee – of which it is a member – to revise the decision to close the AMSA mills in 2023 and 2024, along with 28 steel associations, other institutes and the downstream sector.

Clarke believes that the creation of volume- driven demand, and resulting economic relief, is the only way forward, and states that the HDGASA continues to lobby government to revive the steel sector and create employment through beneficiation and industrialisation.

“We can only appeal to government to engage with urgency and facilitate working groups that will find realistic, sustainable solutions before further de-industrialisation undermines local economic growth and results in even more job losses,” he concludes.