Business
ArcelorMittal South Africa Confirms Full Closure by Q2 2025, Marking a Major Blow to Local Manufacturing
In a significant blow to South Africa’s manufacturing sector, ArcelorMittal South Africa has confirmed the full wind-down of its operations by the second quarter of 2025. This decision follows extensive consultations with the government and Original Equipment Manufacturers (OEMs), primarily in the automotive industry, but no viable solutions were found to save the embattled steel producer. As a result, 3,500 direct jobs will be lost, reports The Citizen.
A Timeline of Challenges
The announcement comes after months of uncertainty and efforts to secure government intervention to keep the company afloat. Last month, The South African highlighted that only government action could save ArcelorMittal. However, despite delays to fulfill a higher-than-anticipated outstanding order book, the inevitable closure has been confirmed.
Key Issues Leading to Closure
ArcelorMittal cited several critical issues that contributed to this decision:
- Scrap Export Tax: The continued imposition of a scrap export tax, which unfairly disadvantages ArcelorMittal.
- Port and Rail Inefficiencies: No progress has been made on improving port and rail efficiencies, and Transnet declined to renegotiate improved tariffs.
- Eskom Pricing Agreement: The company’s application for a negotiated pricing agreement with Eskom was not supported, and no progress was made.
- Trade Measures: Implementing anticipated trade measures did not materialize as expected.
Economic and Operational Pressures
The cost of doing business in South Africa has become increasingly untenable for ArcelorMittal. Eskom electricity costs are set to increase by 12.74% from April 1, 2025, further undermining the company’s competitiveness. Additionally, proposed Transnet tariff increases will elevate already high logistics costs, making them uncompetitive by international standards.
Despite repeated submissions highlighting the adverse impacts of current policies, ArcelorMittal received no formal communication from the Department of Trade, Industry and Competition and the National Treasury regarding a policy review.
Final Steps and Implications
The shutdown of the blast furnace will commence in the first week of March, with the last steel form produced by late March or early April. The final winding down into care and maintenance is expected to be fully implemented during Q2 of 2025.
“This continued inaction, combined with deteriorating cost structures, gives the board and management of ArcelorMittal South Africa no option but to implement the final winding down of business,” said CEO Kobus Verster.
Impact on Local Manufacturing
The closure of ArcelorMittal South Africa is likely to have a profound impact on local car manufacturing and other industries reliant on steel. The loss of 3,500 jobs will also have significant socio-economic repercussions, further straining an already struggling economy.
The confirmed closure of ArcelorMittal South Africa by Q2 2025 marks a somber moment for the country’s manufacturing sector. Despite extensive efforts and consultations, the lack of viable solutions and government support has led to this unfortunate outcome. As the company winds down its operations, the broader implications for South Africa’s economy and workforce remain a pressing concern.
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Government Fails to Save ArcelorMittal South Africa: Thousands of Jobs Lost as Steel Business Closes
