Africa’s largest steel producer ArcelorMittal South Africa (AMSA) has announced that it will proceed with its original plan to shut down its longs business consisting of its Newcastle and Vereeniging works as well as its AMRAS rail and structural steel subsidiary, having had discussions with the government and stakeholders that were unable to yield any solutions.
As SteelOrbis reported previously, in early February this year, the company had postponed its closure plans for about a month due to ongoing discussions with the South African government on the future of its longs business as well as its stronger-than-expected order book.
According to AMSA, the government has not removed tax on scrap exports and the preferential pricing system remains in place. Moreover, South African rail, port and pipeline company Transnet has declined to negotiate increased logistics rates, further elevating logistics costs that are already above international standards. Meanwhile, the domestic electricity company Eskom has not responded to negotiating current high energy prices, which are expected to increase by 12.74 percent as of April 1, further impacting AMSA’s competitiveness. Also, the government has not imposed duties on imports as anticipated and the provisional safeguard duties on import hot rolled coils have been removed.
As a result, the shutdown of the blast furnaces will begin in the first week of March, with the last steel expected to be produced in late March or early April. The closure will be fully completed in the second quarter of this year, affecting approximately 3,500 direct and indirect jobs.
