The Department of Trade, Industry and Competition (dtic) says it intends to continue its engagements with ArcelorMittal South Africa (AMSA) “until a workable resolution to the problems faced by AMSA and the steel industry is reached”. 

In a belated response to AMSA’s January 6 announcement that it would be shutting its long-products business – resulting in the closure of the Newcastle mill as well as facilities in Vereeniging and eMalahleni and the shedding of 3 500 direct and indirect jobs – the dtic expressed “serious  concern” over the wind-down plans.

It highlighted the efforts made during 2024 to avert the closure, which was initially announced in November 2023 and subsequently delayed to allow for further consultations with stakeholders.

This included the establishment by Minister Parks Tau of a technical working group made up of the dtic and AMSA, as well as the departments of electricity and energy, transport, as well as Eskom, Transnet and private stakeholders.

“It has always been, and continues to be the intention of government to continue these engagements until a workable resolution to the problems faced by AMSA and the steel industry is reached. 

“The steel industry is critical in the reconstruction and recovery plan for the South African economy, particularly the manufacturing, mining, construction, engineering, and transportation sectors, which are at the centre of the industrialisation, localisation and beneficiation programmes of government.”

The dtic said that, while the immediate focus would be on addressing structural issues affecting AMSA’s longs steel business, the engagements would be broadened to address productivity improvements and supply-chain efficiencies, investments in low-carbon technologies, competitiveness and regaining of market share.

The issue of local procurement by public and private entities was also highlighted, which the dtic  argued would contribute positively to raising currently weak aggregate demand.

In announcing the wind down decision, AMSA continued to highlight “structural” obstacles to the sustainability of the long-products business, which has been as serial lossmaker for about five years.

These related to persistently weak demand, high and rising logistics and energy costs, increased cheap imports especially from China, and government’s scrap policy, which has placed its blast-furnace-based operation at Newcastle at a cost disadvantage relative to the electric arc furnaces producing steel locally using scrap.

The JSE-listed group acknowledged that there had been “good discussions” with the task team, but indicated that nothing concrete had been agreed to address the problems faced by the unit and it would, thus, wind down the business during the first quarter of 2025.

It revealed the  decision had been communicated with the dtic on December 21.