Arcelor Mittal South Africa stares at closure of long steel biz; awaiting govt's rescue package
ArcelorMittal South Africa may close its long steel business. The company faced a significant loss. It awaits government intervention to support the domestic steel industry. If a solution isn't found, ArcelorMittal will sell assets. Proceeds will strengthen the balance sheet. The company cites challenges like rail disruptions and electricity supply issues.
Reuters ArcelorMittal South Africa (AMSA), a subsidiary of Lakshmi Mittal's steel empire, said the company is still looking at shutting down its long steel production business as it awaits the implementation of South African government's plan to bail out the country's domestic industry.
AMSA announced in January that it is to cease operations at its long steel manufacturing plants in the country, impacting over 3,500 jobs. This prompted some interventions by the Industrial Development Corporation.
Despite the intervention, AMSA suffered a R 500 million loss for the six months ended June 2025, the company said in its consolidated financial statements released this week. "ArcelorMittal South Africa continues to face significant challenges with no improvement in market conditions over the previous period. The prolonged negative international steel cycle remains, ensuring that global and domestic steel markets remained under pressure in spite of some price improvement, notably in China during July," it said. The company said the possibility of closing down its long steel plants as announced in November last year still existed to ensure the company's viability.
"Enhancing the balance sheet will depend on the outcome of the ongoing IDC transaction. Should a sustainable solution not be reached, the company will proceed with the planned permanent wind-down of the longs business. In that event, ArcelorMittal South Africa will promptly initiate monetisation of assets, including Saldanha Steel, the Tubular Mill, the Vereeniging Bar Mill, ArcelorMittal Rail and Structures, and other non-core properties. Proceeds will be applied to strengthen the balance sheet, to reduce debt, and will be reinvested into the flats business to support improvements in earnings and cash flow in order to preserve core business continuity, the company said. AMSA said India was among the countries implementing strong protection measures for their primary steel industries against unfair trade and policy practices. Others included Brazil, the USA, the EU and now joined by the UK, China, Malaysia, Mexico, Canada, and Australia. Though the South African government has introduced initiatives, AMSA said, there has been limited progress with implementing interventions that adequately address the constraints identified. The company also cited major rail service interruptions because of cable theft, resulting in locomotive failures. It said it has also attempted a collaborative problem-solving approach and offered to assist with security arrangements on key rail routes of interest to the company, and other cost impact and mitigation measures. "On two occasions during the past six months, the risk of uncontrolled blast furnace stops arose due to major rail service interruptions. Additional unplanned road transport had to be deployed, resulting in higher direct, operational, and handling costs of some R 317 million, more than double that of R 127 million in 2024," AMSA said. As South Africa faces regular breaks in electricity supply from parastatal Eskom, AMSA's losses in this period had gone up to R41m from R25m a year ago. AMSA said South Africa could maintain and grow a thriving steel industry if government commitments are translated into real and immediate supportive action. "The top two priorities currently are to ensure that there is a vibrant level of steel demand accessible to South African steel producers; and second, that the high levels of imports are dramatically reduced," it said, adding that approximately 68 per cent or 5,18,000 tonnes of these steel imports could be manufactured locally. "Once these priorities are addressed, the industry will be in a much stronger position to progress with investment to improve localisation levels with the aim of completely replacing imports, while turning attention to the issue of decarbonisation," AMSA stated. The company also lamented that action against illicit trade and corrupt and collusive dealings is not currently being addressed by the authorities.
AMSA was born out of the erstwhile state-owned steelmaker Iscor, which Mittal helped turn around before eventually buying it out.
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