Latest news with #Amsa
The Citizen
01-08-2025
- Business
- The Citizen
ArcelorMittal narrows loss, warns of persistent headwinds
Top priorities for the government are boosting local steel demand and sharply curbing high import levels to support the domestic industry, says company. JSE-listed ArcelorMittal South Africa (Amsa) has reported a narrower headline loss per share for the six months ended 30 June 2025. In a Sens announcement on Thursday, the embattled steel producer said it continued to face significant challenges in the first half of the year, with no improvement in market conditions compared to the prior period. Amsa's share price dropped over 4%% on Thursday morning, trading at R1.03 following the filing of its interim results. In the period under review, the headline loss per share decreased from 100 cents to 91 cents, but revenue fell 16.5% to R17.1 billion (2024: R20.5 billion), weighed down by a prolonged global steel downturn. Sales volumes declined 11% to 1.05 million tonnes. Realised steel prices dropped 7%, while the raw material basket price decreased 12%, with international prices down 22%. ALSO READ: ArcelorMittal warns it might close without urgent solution to challenges Amsa's net borrowings for the period stood at R4.6 billion (2024: R5.1 billion). This includes capitalised interest and group charges of R421 million and deferred income of R842 million linked to Industrial Development Corporation (IDC) funding allocated to continue operating its long steel business in the third quarter. 'IDC funding has been applied in a responsible, transparent, and considered manner,' the company said, adding that it is still awaiting the outcome of the IDC's due diligence process. Amsa reiterated that it plans to wind down the long steel business by 30 September 2025 unless a viable solution is found. The group previously raised concerns about the lack of progress in addressing 'structural impediments' threatening the division's sustainability. It said engagements continue with the government and stakeholders in the South African steel and engineering value chain to support structural reform and agree on interventions to reverse the sector's decline. ALSO READ: IDC saves ArcelorMittal days before furnaces switched off However, despite initiatives such as the review of steel tariffs, the export tax on scrap, and the preferential pricing system (PPS), Amsa said progress has been limited in implementing interventions that adequately tackle the constraints. 'South Africa can maintain and grow a thriving steel industry; however, commitments must translate into real and immediate supportive action.' Amsa added that its two most pressing priorities are to ensure 'a vibrant level' of steel demand accessible to local producers and to 'dramatically' reduce high import levels. This article was republished from Moneyweb. Read the original here.
Daily Maverick
16-07-2025
- Business
- Daily Maverick
ArcelorMittal responds, says the mini-mill dream could melt down
ArcelorMittal SA has come out swinging against a recent Daily Maverick article that it says turned the national debate into a scrapyard brawl in favour of mini-mills and scrap metal traders. In a sharply worded statement, ArcelorMittal South Africa (Amsa) claims Daily Maverick 'misrepresents the complex reality of South Africa's steel sector' and unfairly promotes 'a misleading narrative in favour of mini-mills and scrap metal traders, particularly those who benefit from importing cheap finished steel.' The company argues that the journalist (me) presents mini-mills as a silver bullet and 'masks the vested interests of a small cohort of import-reliant firms', adding that the idea these facilities can simply replace integrated production is 'economically and technically untenable'. Cool. Amsa's voice is strained by its terminal injuries — it's long steel business – slated for mothballing come the end of September 2025 – and a policy environment the company says leaves it no choice but to start winding down. Depending on who you ask, the problem is either a failed state, a flawed business model, or both. Long steel's long goodbye Amsa has confirmed that unless a last-minute industrial miracle occurs, it will shutter its loss-making long steel operations at Newcastle Works, Vereeniging Works, and its rail-focused subsidiary. The company says it has exhausted the R1.68-billion bailout from the Industrial Development Corporation (IDC) and 'cannot assume any further financial risks related to the Long Steel Business beyond the next few months.' The closure directly threatens 3,500 jobs. But according to Elias Monage, president of the Steel and Engineering Industries Federation of Southern Africa (Seifsa), the ripple effects could be catastrophic: 'The signs of collapse are unmistakable. This is not just about a single mill – it is about an entire industrial ecosystem at risk.' Monage's message is no longer merely a plea for urgent intervention. In a June statement, he called for a full-scale reset: 'South Africa's steel and engineering sector stands at a perilous crossroads. Years of deindustrialisation, declining production, job losses and a steady erosion of competitiveness have brought us here. This decline is not the result of chance, but a culmination of systemic policy failures, a lack of coordinated action and inadequate implementation of recovery frameworks.' Dance if you want to dance Monage once championed the Steel Master Plan as a roadmap for reindustrialisation. Now he concedes the plan has 'not lived up to its potential'. Instead of decisive action, he describes a 'diffusion and inaction' that left industry leaders disillusioned. 'The Steel Master Plan had over 20 workstreams and 73 deliverables, but it lacked focus. Progress stalled, and as it did, industry leadership began to withdraw,' Monage says. The hard stats back him up: steel production remains 18% below its 2007/8 peak, capacity utilisation has slipped below efficiency benchmarks, and per capita steel consumption has dropped by 37% since 2013 – all while global steel intensity rises. Monage argues that South Africa needs a new 'strategic agreement for impact,' a compact that binds government and industry to shared, measurable objectives like achieving 4-5% annual growth in metals and engineering output. 'Business as usual will not suffice,' he warns. 'This moment demands a bold shift – from fragmented policies and siloed departments to a unified national compact anchored in public-private collaboration.' Let's play the blame game National Employers' Association of South Africa (Neasa) CEO Gerhard Papenfus has long argued that Amsa's woes are self-inflicted, a product of propping up an uncompetitive giant. But Amsa doesn't think the one-time, self-appointed envoy to Washington, DC, is arguing in good faith. 'Though Neasa does not publicly disclose its membership, multiple sources including Neasa press statements and trade forums highlight its strong representation of steel traders and re-rollers with minimal domestic productive capacity,' the company said. Amsa also countered that narrative directly. 'Mini-mills that can replace integrated primary steel production are economically and technically untenable,' the company insists. 'Mini-mills based on scrap cannot produce the full range of high-quality, flat and long products required by the automotive, mining, defence, renewable energy and construction sectors.' The core argument is that the Preferential Pricing System (PPS) and export restrictions have cost informal workers and recyclers R60-billion over a decade, while propping up a few scrap-based mills employing only 5,000 people. Government goes to the mat 'The PPS has not just failed; it has actively undermined the viability of integrated producers,' Amsa says. Worse still, it accuses mini-mills of gaming the system: 'Declining to purchase scrap at PPS-mandated discounts, only to subsequently call for tighter export controls to suppress prices further.' The Department of Trade, Industry and Competition (DTIC) has admitted it is in 'firefighting mode,' with Minister Parks Tau's working group scrambling to contain the fallout. But Monage is clear: 'Government must acknowledge that past interventions, however well-intentioned, have not delivered. Without leadership, clarity and decisive action, the socioeconomic consequences – more job losses, more factory closures, deeper erosion of capacity – will only deepen.' Meanwhile, globally… ArcelorMittal's global operations are booming. With Q1 2025 gross profit of $1.6-billion and strategic expansions in Liberia, India and the US, the global group is thriving while Amsa fights for its life. The South African story remains bleak: rail failures labelled 'the worst performance on record', soaring energy costs and shrinking domestic demand. Even with a smaller loss expected this month, Amsa warns that 'without immediate policy coherence', integrated plants like Newcastle and Vanderbijlpark could become relics. But Monage offers a final plea for collective ambition: 'No country can industrialise – or reindustrialise – without a resilient metals sector. Steel is the foundational input into mining, construction, transport, manufacturing, energy and agriculture. We must rescue the original intent of the Master Plan and build a future of inclusive, job-rich growth.' At stake is not just the survival of one steel mill or one company. It's the question of whether South Africa can once again build things. DM
IOL News
14-07-2025
- Business
- IOL News
ArcelorMittal South Africa warns early steps may be required to wind down Longs business
ArcelorMittal South Africa said negotiations to shore up the business environment of its Long Business, principally to address various government infrastructure and policy failures, had come to nought so far through a six-month deferral period before it closes its Long Business. Image: Anamul Rezwan/Pexels ArcelorMittal South Africa (Amsa), which continues to pay heavy prices for government infrastructure and policy failures, may be left with no option but to prepare for the wind down process of its Longs Business, well in advance of September 30, 2025. This announcement, and despite a forecast of slightly reduced headline earnings losses for the six months to June 30, caused the share price to slump 7.89% to 105 cents on the JSE by Monday afternoon - considering that three years ago the price traded above R5 a share. On March 31, Amsa announced its decision to wind down the Long Steel Business had been deferred for at least 6 months to September 30 after it received a R1.68 billion funding facility from the Industrial Development Corporation (IDC). The facility was now fully drawn and would enable the Longs Business to operate through the third quarter. The business would also continue to trade until the end of September, having regard to the commitments made to its customers. However, so far, 'limited' progress was made to redress major structural issues, which was the main aim of the deferral period. 'High imports continue to flood into the domestic market. Transnet's rail performance deteriorated to its lowest levels ever, resulting in significantly elevated operating risk and unaffordable additional costs being borne by the company,' Amsa's directors said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ The challenges that have faced the group over several years include structural distortions created by the Preferential Pricing System (PPS) and export tax on ferrous scrap in favour of scrap-based steel makers to the disadvantage of integrated steel makers, weak domestic demand, and the lack of growth projects for steel. There is also insufficient import protection and continued circumvention of tariff protections by local companies, without prosecution. The rail service performance remained poor with associated, high, globally uncompetitive and unaffordable tariffs. In addition, electricity tariffs were unaffordable and globally uncompetitive, they said. On two occasions in the past six months, the risk of uncontrolled blast furnace stops arose due to major rail service interruptions, on account of an "unprecedented spate of cable theft and locomotive failures." 'Additional unplanned road transport had to be deployed, resulting in higher direct, operational and handling costs of R317 million for the period,' the group's directors said. Since March, Amsa had been exploring options to address these challenges, while the IDC conducted due diligence into the company, and the government had been pursuing structural interventions, all of which were still ongoing, they said. 'Unless a solution is implemented timeously, and to ensure the orderly closure of the Longs Business as soon as possible after the deferral period, ArcelorMittal South Africa may have no option but to take certain operational steps to prepare for the wind down process well in advance of September 30, 2025.' Meanwhile, the group predicted that earnings per share would improve 15% to a loss of between R0.82 and R0.93 a share for the six months to June 30, from a loss of R1.09 per share at the same time last year. The full interim results are expected to be released on July 31. The group said a global cyclical downturn in the steel industry has continued now for almost two years, which is longer than the norm. Global crude steel production fell by 1.3% from January to May 2025, compared to the same period in 2024, according to the World Steel Association. In South Africa, all sectors except agriculture contributed to a weaker annual GDP outlook, with tough trading conditions in key steel-consuming sectors: construction, automotive, mining, fabrication, and energy and transport. First half sales volumes were expected to be about 10% down compared to 2024's first half. Apart from lower demand, sales volumes for flat steel products continued to be affected by high import levels, whilst long steel product sales reflected the uncertainty around its continuation. Net realised prices in rand terms were anticipated to be more than 5% lower, impacted in part by a stronger rand-dollar exchange rate. The steel and manufacturing industry, represented by various industry associations, appeared before the portfolio committee responsible for trade, industry and competition on June 4, 2025. The industry expressed disillusionment with policy developments and dissatisfaction with the continued decline of the steel sector, which is creating a challenging business and investment climate in South Africa. Imports now represented more than 35% of apparent steel consumption and significantly undermined domestic supply. Visit:
The Citizen
02-07-2025
- Business
- The Citizen
ArcelorMittal hauls Transnet to Competition Tribunal for market abuse
Comes at a time when the logistics operator is undergoing major reforms to allow private operators access to ports and rail. The steel producer says Transnet Freight Rail missed more than 40% of its delivery targets in 2024. Picture: Supplied Ailing steel producer ArcelorMittal SA (Amsa) has hauled Transnet to the Competition Tribunal, accusing the state-owned rail and port operator of abusing its market dominance. Transnet says the complaint of anti-competitive behaviour levelled against it was previously dismissed by the Competition Commission and has now been self-referred by Amsa to the tribunal. 'Transnet is opposing this self-referral and has filed papers accordingly with the Competition Tribunal,' says the logistics operator in a response to Moneyweb. There were hints of disquiet in Amsa's 2024 annual report when it singled out Transnet Freight Rail (TFR) as a key risk to the business that had disrupted production and output volumes, all the while increasing costs. ALSO READ: Government still talking to ArcelorMittal while Seifsa identifies challenges TFR missed more than 40% of its delivery targets in 2024, notes Amsa, which relies on rail for the shipment of iron ore to its mills. Over the previous three years, rail tariff increases outstripped inflation. Amsa, under pressure from customers and government, has deferred its decision to wind down its long steel business following a R1.7 billion loan facility from the Industrial Development Corporation (IDC). It also received a Temporary Employee Relief Scheme (Ters) grant to assist in funding employee costs, which will reduce the drawdown required against the IDC facility. Amsa's performance has been undercut by cheap foreign imports, rising logistics costs and electricity prices that have surged 835% since 2007. ALSO READ: IDC saves ArcelorMittal days before furnaces switched off Tribunal is 'long shot' The tribunal says Transnet has filed an exception application to Amsa's complaint referral in which it seeks to dismiss the complaint on the basis that there is no case for it to answer, or that the key arguments are vague and embarrassing. An exception application is filed when one party in a dispute argues that the case is inherently defective in law. 'At this stage, the filing process is still underway and the merits of the main matter self-referred by Amsa must still be heard,' says the tribunal in response to questions from Moneyweb. Transnet's exception application must first be heard before the main arguments can be considered by the tribunal. 'The Tribunal is yet to hear the matter once filing processes have been completed and will pronounce on its decision after hearing the merits of the complaint,' says the tribunal. Moneyweb approached Amsa for comment but had not received a response by the time of publication. A transport expert who asked not to be named tells Moneyweb that Amsa's approach to the tribunal is a long shot, coming as it does at a time when the state is finally in the process of relinquishing its monopoly over port and rail infrastructure. Port and rail infrastructure are being pried out of Transnet's hands and placed under independent managers as a precondition for allowing private sector operators. ALSO READ: Did government policy kill SA's steel industry? Debt in excess of R140bn Transnet's declining operational performance – which appears to have been arrested in 2024 – is a critical obstacle, alongside Eskom's unstable grid, to faster economic growth. Minerals Council SA reported R50 billion in export losses in 2022 due to TFR's inability to ship sufficient ore to the ports. In 2023, Exxaro was forced to find costlier alternatives such as road due to TFR's rail capacity problems and lower coal prices. Transnet reported a R7.3 billion net loss in 2024, up from R5.1 billion in 2023, driven by higher finance costs and a R9.1 billion provision for a court-ordered payout to Sasol and TotalEnergies for pipeline overcharges. Transnet is appealing the court order. The company is saddled with debt in excess of R140 billion, which it is not in a position to repay without state assistance. This article was republished from Moneyweb. Read the original here.
The Citizen
08-05-2025
- Business
- The Citizen
Tariff lifeline for ArcelorMittal means higher prices for customers
'Safeguard' duties of 13% were imposed at the start of May to shield Amsa's hot-rolled steel products from international competition. Itac and the IDC both fall under the dtic. In setting steel tariffs, Itac is accused of cossetting its own portfolio. Picture: Supplied The International Trade Administration Commission of SA (Itac) has announced temporary 'safeguard' duties on some hot-rolled steel products produced by ArcelorMittal SA (Amsa). The 13% safeguard duties kicked off on 2 May for a year, reducing to 11% and 9% over the subsequent two years, and then to zero. The safeguard duty is on top of the 10% customs duty already in place, bringing the import protection to 23% in the first year. The total duties on hot-rolled products fall to 21% from May 2026 and 19% from May 2027. The safeguard duties were gazetted last week and are seen as a lifeline for embattled steel producer Amsa, which has been undercut by low-cost imports from China. 'There's nothing worse than a temporary tariff,' comments Neels van Niekerk, executive chair of International Steel Fabricators. Hot-rolled steel is used in construction, manufacturing, and engineering and is a key input in mining equipment, water tanks, gas cylinders, and truck trailers. ALSO READ: IDC saves ArcelorMittal days before furnaces switched off 'Necessary, not punitive' – Itac 'Safeguard measures are designed to address unforeseen surges in imports that threaten or cause serious injury to a domestic industry,' says Itac. 'While these measures are not punitive, they are necessary to ensure fair trade conditions and protect local industries from being overwhelmed by excessive foreign competition.' Imports now account for about a third of local steel consumption, with Amsa's net realised prices falling to levels last seen in 2015. This, and Amsa's galloping transport and electricity bill – up 14% to R3.2 billion in 2024 – contributed to its decision to wind down its long steel mills in Newcastle and Vereeniging. ALSO READ: Government still talking to ArcelorMittal while Seifsa identifies challenges Perspective 'Effectively, what this means is that customers can expect to pay 13% more for hot-rolled steel products,' says Gerhard Papenfus, CEO of the National Employers Association of SA (Neasa). 'Amsa asked for additional protection and they got it. What South Africa needs right now is steel of the best possible quality, wherever we can get it. 'If we have to import, then so be it. We cannot continue to support industries that cannot compete without more and more protection.' The Industrial Development Corporation (IDC) provided R1 billion in short-term lending to Amsa, alongside another R380 million loan and an additional R1.68 billion shareholders loan in the hopes of extending the life of its longs business. However, that may not be enough to rescue Amsa. 'For Amsa Newcastle to survive, it will require a lot more than money,' says Donald MacKay, CEO of XA Global Trade Advisors. 'If the problems they identified are not addressed, they will burn through the money from the IDC and we will be back here [for more money].' ALSO READ: Concern about SA steel industry: Trump's tariffs and ArcelorMittal closure looming Market distortion The steel market is further distorted by the IDC's R14 billion exposure to mini-mills, which use scrap metal as feedstock and compete with Amsa in certain products. These mills enjoy a substantial pricing advantage through the Preferential Pricing System (PPS), which allows them to secure scrap at 30-50% discounts to market prices. This means scrap can only be exported after being offered to local mills at a 30% discount. This is in effect a ban on scrap exports and a R8.5 billion annual subsidy to mini mills – resulting in an estimated 50 000 scrap collectors in SA being forced out of business. Scrap dealers tell Moneyweb that removing the PPS would allow the 300 000 scrap collectors in SA to earn a decent living rather than transferring this benefit to the mills. This benefit comes on top of a 20% export duty on scrap. Mark Fine, head of the Scrap Recycling Coalition, an informal grouping of 48 scrap metal dealers, says these mills produce billets, which are little more than scrap 2.0 and a way to circumvent export restrictions on scrap. ALSO READ: Did government policy kill SA's steel industry? Mini-mills say even with the PPS in place, there remains a shortage of scrap in SA, though Fine says this is disproven by the fact that these mills exported more than 400 000 tons of recycled scrap in billet form in the first few months of 2025. Itac's steel tariff policy has been criticised as self-serving, given the IDC's massive exposure to these mini-mills, some of which are in business rescue. Itac and the IDC both fall under the Department of Trade, Industry and Competition (dtic). In setting steel tariffs, Itac is accused of cossetting its own portfolio. 'If government demand increases, it will be met by product from the mini mills, because the subsidies give them an ability to keep their prices low. Amsa on the other hand, has to pay back the IDC loan, which will be burnt through even quicker this time, given the steep discount they are providing on long products to simply stay in the game. ALSO READ: Steel producers slam ArcelorMittal's call to end scrap export tax PPS 'a massive scam' Fine says the PPS is a legacy of former trade and industry minister Ebrahim Patel and has been fatal for the industry. 'These mini-mills are mostly foreign-owned and they add very little value in the steel chain. Yet they receive this massive transfer of wealth each year, claiming that without the PPS South Africa would face a shortage of scrap. 'That's an absolute lie. These mini mills produce what I call scrap 2.0 which they can then export and make nice profits for themselves because the export restrictions don't apply. This is a massive scam.' Nampak is reckoned to be losing R115 million a year due to its inability to earn fair market value on its ferrous scrap. ALSO READ: Cheap IDC funding 'placing the complete steel market at risk' And Transnet – the country's largest generator of scrap – is reckoned to lose R40-R50 million a month due to the PPS. That does not count scrap from automotive producers such as VW and Toyota. Tami Didiza, manager for stakeholder management and communications at Amsa, says a number of these companies have been unable to operate successfully and could have closed had the current dtic policies of scrap intervention through the PPS, Scrap Export Tax and an export ban (which lapsed in 2023) not saved them over the last five years. 'The government intervention to allow a deferral of the wind down of the Amsa longs business provides an opportunity for the fundamental structural issues facing the steel industry to be addressed, and to place it on a sustainable path by removing the market distortions that have been created,' says Didiza. This article was republished from Moneyweb. Read the original here.
