ArcelorMittal South Africa Ltd. has decided to close its long steel products division, potentially affecting around 3,500 jobs. The company had initially announced the decision in February last year, but delayed the move after consulting with the government and state-owned freight firms. The closure is driven by high logistics and energy costs, as well as insufficient government policies to support the sector. ArcelorMittal cited deteriorating local and global markets, rising costs, and the influx of low-cost imports, particularly from China, as key factors contributing to the decision.
South Africa's steel industry is facing its most significant economic challenge since the 2008 financial crisis. In recent years, the rise in imports from low-cost producers like China has continued to pressure local manufacturers. As a result, production at ArcelorMittal's Newcastle and Vereeniging Works will cease. According to the company, the closure will lead to substantial losses in the country's economy and job market.
The company also expects to report a larger loss for the year 2024. The headline loss per share is projected to increase from 1.70 rand last year to between 4.06 rand and 4.41 rand. This closure has dealt a significant blow to the South African government's efforts to revive the steel sector with business-friendly policies. Over the past decade, the South African economy has grown by an average of less than 1% annually, while population growth has outpaced this growth, further hindering the government's industrial revival goals.
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