ArcelorMittal South Africa (Amsa) has announced that it will wind down its long steel division, with plans to lay off approximately 3,500 workers. The company has confirmed that all efforts to save the business have failed, and the closure process will start at the end of September.
The CEO of Amsa, Kobus Verster, sent a memo to employees explaining that the company’s attempts to secure funding to keep the long steel unit open beyond September 2025 had not succeeded. As a result, the company will begin issuing notices to employees affected by the closure, starting from September 1.
Amsa’s long steel business has faced ongoing financial struggles, posting losses of R1.7 billion since 2023. Despite support from the government and the Industrial Development Corporation (IDC), including a R1.7 billion bailout and wage subsidies, the company’s management said the structural problems remain unresolved. These include rising imports, limited tariff protection, high electricity costs, and a declining rail system.
The decision to wind down the business will have a significant impact on the economies of Newcastle and Vereeniging, where the steel plant is a major employer. The closure comes after the IDC indicated it had helped buy time for the automotive sector to find alternative suppliers of speciality steel, which Amsa supplies.
Some industry players have criticised Amsa’s practices following the bailout, accusing the company of predatory pricing to weaken rivals. Smaller competitors, Cape Gate and Scaw, even took legal action against Amsa, alleging it slashed prices below market value to eliminate competition after receiving government support.
The government and industry stakeholders acknowledge the challenges but are also exploring ways to develop domestic steel production. The IDC’s acting COO mentioned efforts to grow local supply of speciality steel, aiming to reduce costs for vehicle manufacturers facing tariffs hikes, especially those in the automotive sector.
Overall, the impending closure of Amsa’s long steel division highlights the ongoing struggles within South Africa’s steel industry, amid global and local economic pressures. The fallout is expected to be severe for workers and regional economies, with many questions about the future of steel manufacturing in the country remaining unanswered.