ArcelorMittal South Africa has announced the closure of its long steel products division, a move that is expected to affect approximately 3,500 jobs, both directly and indirectly.

The decision, which has been under consideration since November 2023, comes after extensive consultations with the government and the state-owned freight company, following initial delays.

The plant produces materials such as fencing, rail, rods and bars, which are essential in sectors like construction, mining and manufacturing.

ArcelorMittal said that persistently high logistics and energy costs, along with inadequate government policy support, have made operations unsustainable in South Africa.

The steel industry is experiencing its "most prolonged challenge" since the 2008 financial crisis, worsened by surging low-cost steel imports, further harming the business, the company noted.

Steel production at the facility is set to halt by the end of January 2025, with the closure of remaining operations to be concluded in Q1 of the same year.

The decision will impact all long steel plants including the Vereeniging Works, Newcastle Works, and rail and structures subsidiary AMRAS.

However, Newcastle will maintain a reduced coke-making operation due to lower demand, the company said.

ArcelorMittal is currently in discussions to realign the R1bn ($53.85m) working capital facility, which was secured in 2024, to assist with the transition.

ArcelorMittal South Africa CEO Kobus Verster said: “As a company, we are disappointed that all our efforts over the last year have not translated into a sustainable solution. The issues tabled for resolution sought to level the playing field against international and local competitors.

“The issues raised outlined those factors that could have, and still can, firmly address the structural problems within the South African steel industry, especially for our Longs Business, but also within the company, the South African steel industry and value chain.”