Business
Lakshmi Mittal Steps in to Save South Africa’s Steel Industry and 100,000 Jobs

South Africa’s steel industry, a cornerstone of the nation’s economy, is facing a critical moment. Indian steel magnate Lakshmi Mittal has stepped in, meeting with South African President Cyril Ramaphosa and other top officials at the World Economic Forum in Davos to discuss solutions that could save 100,000 jobs and stabilize vital industries like automotive manufacturing.
A Nation at a Crossroads
The crisis stems from ArcelorMittal South Africa’s (AMSA) announcement to close three steel plants, including the Vereeniging and Newcastle mills, by the end of January 2025. These plants produce specialty steel products vital to industries such as construction, mining, and automotive manufacturing.
AMSA has cited several challenges, including:
- Unreliable Freight Rail Services: Inconsistent rail services have hampered the transport of raw materials.
- High Electricity Costs: Rising energy prices are cutting into the company’s profitability.
- Strict Scrap Metal Policies: Government mandates require local scrap metal to be sold at 30% below international rates, coupled with a 20% export tax.
- Economic Pressures: A sluggish economy has further strained operations.
The potential closures threaten to derail President Ramaphosa’s vision of economic recovery, which hinges on a R4.8 trillion infrastructure project.
Urgent Discussions at Davos
Mittal met with Finance Minister Enoch Godongwana, Trade and Industry Minister Parks Tau, and Electricity Minister Kgosientsho Ramokgopa before his discussion with Ramaphosa. While no concrete resolutions have been reached, the urgency of the situation was clear.
Lucio Trentini, CEO of the Steel and Engineering Industries Federation of South Africa, warned that closing the mills would be a “huge setback” for South Africa’s industrial goals, jeopardizing thousands of jobs and the broader economy.
Ripple Effects Across Key Industries
The consequences of these closures extend beyond steel production:
- Automotive Manufacturing: South Africa’s automotive industry, which employs over 116,000 people, relies heavily on AMSA’s specialty steel. Major carmakers like Toyota and Volkswagen have warned that losing local steel supplies could disrupt production.
- Construction and Mining: The loss of local specialty steel would increase reliance on imports, driving up costs and slowing down infrastructure projects.
In letters to AMSA and government officials, automotive industry leaders noted they use over 70,000 tons of “specialty long-steel grades” annually, which AMSA is the only local producer of. Without sufficient time to secure alternative suppliers, production delays and job losses are imminent.
A History of Challenges
Mittal’s relationship with South Africa has not been without controversy. Since acquiring Iscor, the former state-owned steelmaker, in 2003, ArcelorMittal South Africa has faced accusations of price-gouging and neglecting plant maintenance. In 2016, the company was fined $110 million for breaching antitrust laws.
Despite these issues, Mittal’s involvement may be crucial to navigating this crisis and preserving the steel industry’s role in South Africa’s economy.
Proposed Solutions
AMSA has called for several measures to stabilize operations:
- Reforming Scrap Metal Regulations: Adjusting rules that make local steel production uncompetitive.
- Higher Tariffs on Imported Steel: Protecting local producers from cheaper foreign competition.
- Government Collaboration: Increased support to address infrastructure and energy challenges.
While discussions continue, time is running out. Without immediate action, South Africa’s plans for industrial growth and economic recovery could face severe setbacks.
The stakes couldn’t be higher. With over 100,000 jobs on the line, resolving the steel industry crisis is critical for South Africa’s economy. Lakshmi Mittal’s renewed engagement with South African leaders offers a glimmer of hope, but whether it translates into actionable solutions remains to be seen.
For now, industries and workers affected by the looming closures can only wait and hope for a resolution that safeguards their futures.
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