ArcelorMittal South Africa (AMSA) has confirmed that the Newcastle blast furnace has been placed into temporary care and maintenance and that it is taking preparatory steps towards the potential closure of its long steel business.

The shutting of the blast furnace was confirmed in an official update to the market after a letter was sent to staff at the end of August indicating that it had been unable to find a solution to address the structural problems that had made the longs business commercially unsustainable.

In March, AMSA deferred the wind down of the business until September 30, having received funding support from the Industrial Development Corporation (IDC) to do so, and to allow time for various policy, partnership and operational solutions to be explored with the help of the Department of Trade, Industry and Competition (dtic).

However, in its earlier message to staff the group said it had not been able to secure a pathway for the sustainability of the longs business. It also issued notices in terms of the Labour Relations Act to employees indicating that there could be job cuts.

In its update to the market, AMSA expressed deep disappointment at the failure to find a solution, and said it recognised the “profound impact this uncertainty has on our employees, their families, our suppliers and our customers, and the communities that have grown around the long steel business”.

“The long steel business will continue trading until shortly after the end of the deferral period.

“Importantly, the flat steel business remains fully operational and continues to serve customer requirements.”

The IDC, which had provided R2.6-billion to AMSA, including a R1.68-billion interest-free loan, had conducted a due diligence into the longs business, but indicated recently that it would not be in a position to salvage the business on its own.

The dtic, which has been leading efforts to find a solution has not yet commented, but has indicated that it would be issuing a statement in “due course”.