ArcelorMittal winds down long-steel business, leaving about 3,500 out of jobs

The board and management of ArcelorMittal SA announced on Monday it will proceed with the winding down of its longs business, which will be placed into care and maintenance.

It said the final number of retrenchments will depend on agreed alternatives and consultation outcomes, but it is envisaged that about 3,500 direct and indirect jobs may be affected.

In a statement, the company said the wind-down will impact all long-steel plants, including the Newcastle Works, Vereeniging Works and the rail and structures subsidiary, AMRAS.

“Steel production is anticipated to cease by late January 2025, with the wind-down of the remaining production processes completed in Q1 2025,” the company said.

It said Newcastle's coke-making operations will continue, though scaled back to reflect reduced demand.

Regarding jobs, the company said it will be commencing with a consultation process in terms of section 189 of the Labour Relations Act. A notice in terms of the Labour Relations Act will shortly be issued and a large-scale retrenchment is contemplated.

“ArcelorMittal SA remains confident that the remaining business can be successfully restructured to be competitive, sustainable and profitable.”

In October last year, ArcelorMittal SA informed shareholders of anticipated third-quarter losses, driven by weak financial performance in the longs business.

Key contributing factors included deteriorating global and local steel markets, unaffordable energy and logistics costs and surging low-cost steel imports, particularly from China.

The company said despite implementing significant cost-cutting and cash management measures, the financial outlook for the fourth quarter of 2024 remained extremely challenging, and consequently, the expected financial performance for the 2024 financial year against that of 2023 would be substantially weaker.

In November 2023, the company announced its decision to place the longs business into care and maintenance due to prolonged weak economic conditions, logistics and energy challenges and unsustainable competition from low-cost imports.

It said efforts to delay closure through targeted short and longer term interventions continued throughout 2024, with operations extended to provide time for securing solutions.

While the company appreciated the support from the government and other stakeholders, and having made some progress with the identified initiatives, these had not been adequate.

The package of initiatives sought had not materialised to a level that would change the fundamentals of the structural problems the company had been experiencing in the longs business.

It said market conditions worsened into the fourth quarter of 2024, with global steel demand and prices under severe pressure which detrimentally affected the financial performance of the entire ArcelorMittal SA business.

“By year-end, the company faced no alternative but to proceed with the winding down of the longs business, prioritising a well-considered and responsible process to minimise the impact on employees and stakeholders, while ensuring the sustainability of its remaining operations.”

CEO Kobus Verster said the company was disappointed that all its efforts over the past year had not translated into a sustainable solution.

“The issues tabled for resolution sought to level the playing field against international and local competitors. The issues raised outlined those factors that could have, and still can, firmly address the structural problems within the South African steel industry, especially for our longs business, but also within the company, the South African steel industry and value chain.

“We had hoped that matters would not have come to this conclusion, at a time when our country can ill-afford job losses and the further erosion of industrial capacity.”

Verster said the company was grateful to all stakeholders who had tried to assist and its employees who had remained dedicated and supportive during the past year.

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