ArcelorMittal South Africa Negotiates Funding to Postpone Long Steel Business Closure

ArcelorMittal South Africa is negotiating funding to postpone the closure of its long steel business, impacting 3,500 jobs. The planned shutdown, attributed to losses and low demand, was initially set for April after unsuccessful talks with the government. The company seeks R3 billion to maintain operations and has requested support measures from the government and related organizations.

ArcelorMittal South Africa is currently in negotiations with the government and relevant stakeholders to secure financial support aimed at delaying the impending closure of its long steel business. The company had previously announced plans to cease long steel operations, which include the production of essential materials such as fencing and rails, due to poor demand and infrastructure difficulties, set for cessation by April following unsuccessful discussions with governmental bodies.

This closure, impacting approximately 3,500 jobs and various industries, is predominantly caused by operational losses that have doubled to R1.1 billion in 2024. A headline loss of R5.1 billion was reported for the year ending December 31. The company emphasized that without a financial agreement, postponing the shutdown would prove unfeasible, and thus, they are continuing to manage the winding down process while discussions remain active.

Initially planned for January 2025, the shutdown of the long steel division involves starting with steel production and concluding all operations by the end of the first quarter of that year. The South African Government has reportedly extended initial support of around R500 million to assist steelworkers’ salaries for a period of six to eight months, as per Bloomberg’s sources.

Negotiations are underway for additional financing through the Industrial Development Corporation (IDC), which may seek to increase its stake from 8.2%. Moreover, both the IDC and the government are advising ArcelorMittal to consider potential offers for the two mills in Vereeniging and Newcastle, which are integral to the government’s economic rejuvenation strategy.

ArcelorMittal is aiming for around R3 billion to sustain operations for an additional twelve months and build inventories for original equipment manufacturers such as Volkswagen and Isuzu Motors. Additionally, the company has requested the removal of export taxes on scrap metal, the implementation of import duties, as well as reductions in electricity and rail freight costs.

In summary, ArcelorMittal South Africa is actively seeking governmental and stakeholder support to delay the closure of its long steel operations due to significant financial losses and adverse market conditions. The proposed financial aid from the government and the IDC highlights the importance of maintaining production capacity for economic and industrial stability. The outcome of these funding negotiations will be crucial for protecting jobs and ensuring ongoing contributions to the economy.

Original Source: www.mining-technology.com