Africa’s largest steel producer ArcelorMittal South Africa has announced its decision to shut down its longs business consisting of its Newcastle and Vereeniging works as well as its AMRAS rail and structural steel subsidiary, due to several reasons including the struggling domestic steel market, after having had several extensive discussions with the government and stakeholders, which did not offer any concrete solutions.
Accordingly, the reasons behind the decision were weak economic growth, higher energy and logistics costs, an increase in low-priced imports especially from China, overcapacity both in the domestic and global markets, and scarce policy interventions by the South African government.
ArcelorMittal South Africa will now put its long steel plants into care and maintenance mode. Steel production is expected to be discontinued by the end of this month, with the remaining production processes closed in the first quarter. However, coke production at Newcastle will continue, though it will be reduced due to low demand. The closure will affect about 3,500 direct and indirect jobs.
Also, the company anticipates that its loss will widen and that its revenue will drop by more than five percent year on year due to weaker steel prices, its reduced capacity utilization rate, and the challenges in its longs business.