ArcelorMittal South Africa has announced that it is negotiating with the government and other stakeholders for financial support that could postpone the planned shutdown of its long steel business.
In February, the company revealed plans to cease its long steel operations, which produce materials such as fencing, rail, rods and bars, by April after unsuccessful discussions with the government.
The planned closure, which will affect 3,500 jobs and disrupt various industries, was attributed to weak demand and infrastructure issues.
The company’s operational loss for its long steel business doubled to R1.1bn in 2024 and it reported a headline loss of R5.1bn for the year ended 31 December.
“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,” the company stated.
“It should be noted that without agreement regarding the funding and related matters, the deferral of the wind down of the longs business will not be feasible. Accordingly, the wind down process has not been stopped and is being managed in a manner that accommodates ongoing funding discussions,” the company added.
ArcelorMittal first announced the closure of its long steel products division in January 2025, starting with steel production, with the closure of the remaining operations by the end of the first quarter of 2025.
The South African Government has proposed initial support of approximately R500m to cover steelworker salaries for six to eight months, reported Bloomberg, citing people with knowledge of the matter.
Additional bridge financing is being discussed with the Industrial Development Corporation (IDC), which could increase its stake in the company from the current 8.2%, the people said.
The IDC and the government are also encouraging ArcelorMittal South Africa to consider offers for the two mills slated for closure, located in Vereeniging and Newcastle.
Keeping the mills operational is vital for the government’s strategy to rejuvenate the economy through infrastructure projects, as well as for the car-making and mining sectors, which are significant foreign exchange earners.
ArcelorMittal South Africa is seeking around R3bn to maintain the mills for an additional 12 months and to build inventory for car manufacturers such as Volkswagen and Isuzu Motors, the people said.
In addition to funding, ArcelorMittal has requested the removal of an export tax on scrap metal and the implementation of import duties, as well as reduced electricity and freight rail costs, reported Reuters.
