ArcelorMittal South Africa (AMSA) has announced that it has requested a ZAR 3.1 billion (approximately USD 170 million) bailout package from the government as it is on the verge of closing its long steel mills across the country. These funds are aimed at averting the closure of the Newcastle and Vereeniging plants and preventing the loss of around 3,500 direct and indirect jobs. The company had originally planned to close these plants at the end of January, but this date has been postponed by a month in order to complete existing orders.
Negotiations have reportedly failed to yield results in talks with the government and AMSA is operating in a difficult operational environment due to high energy costs, transportation expenses and cheaper imports. The company is demanding lower electricity prices from Eskom, the state energy company. The government has provided AMSA with ZAR 380 million (about USD 20 million) to continue operations, but additional funds are intended to keep the Newcastle plant operating for another year.
AMSA has requested assistance from the Unemployment Insurance Fund to partially cover the salaries of 3,500 affected employees. The cost of this support is estimated at around ZAR 2 billion (approximately USD 105 million). Finally, the IDC (Industrial Development Corporation) provided AMSA with ZAR 1.2 billion (approximately 63 million USD) in working capital last month, but the company's future is likely to depend on these bailouts.
Comments
No comment yet.