ArcelorMittal South Africa is negotiating with the government to secure funding to potentially defer the closure of its long steel operations, which is expected to impact 3,500 jobs. The discussions involve removing an export tax on scrap metal and implementing import duties, amidst rising operational losses. The company seeks sustainable solutions to address financial challenges and supply chain disruptions.
ArcelorMittal South Africa is currently engaged in discussions with the government and other stakeholders to secure funding that may postpone the planned closure of its long steel operations. The company had announced on February 28 its intention to halt the production of various long steel products, including fencing material and rail, by April, following unsuccessful negotiations with the government regarding the financially struggling plant.
According to the company’s statement, “ArcelorMittal South Africa is engaging with stakeholders, including government, regarding funding and related matters to enable the deferral of the wind down of the longs business.” While the wind-down processes are ongoing, they are being managed to allow for continued discussions on funding alternatives.
However, the company emphasized that without securing the necessary financial agreements, delaying the closure of its long steel operations will not be possible. In addition to seeking funding, ArcelorMittal has requested the government to eliminate the export tax on scrap metal, which they argue favors recyclers, and to implement import duties while facilitating reduced energy and transportation costs.
A spokesperson for South Africa’s industry ministry corroborated the discussions with ArcelorMittal, affirming that the government is focused on job preservation. The impending closure, announced in November 2023, results from diminished demand and ongoing infrastructure challenges, affecting approximately 3,500 jobs and vital supply chains within various sectors, including automotive and construction.
The financial strain on ArcelorMittal South Africa is evident, with losses in its long steel operations doubling to 1.1 billion rand ($60.56 million) for 2024, compared to 600 million rand the previous year. The company reported a headline loss of 5.1 billion rand for the year ending December 31, 2023, substantially more than a 1.89 billion rand loss reported in 2022, primarily due to poor performance and low-cost steel imports from China.
In conclusion, ArcelorMittal South Africa is striving to avert the closure of its long steel operations through negotiations with the government for essential funding and policy support. The potential shutdown poses a significant risk to thousands of jobs and key industrial supply chains. While the company faces severe financial challenges, its ongoing dialogue with stakeholders indicates a commitment to finding solutions and preserving the longs business.
Original Source: www.marketscreener.com
