ArcelorMittal South Africa (ACLJ.J) witnessed a sharp decline of over 7% in its shares following the company's announcement of the impending closure of its long steel operations. This decision is attributed to subdued demand and persistent infrastructure challenges, potentially leading to the loss of 3,500 jobs. The closure of the long steel unit is expected to impact both full-time staff and contractors. Over the past seven years, steel consumption in Africa's most advanced economy has plummeted by 20% due to limited infrastructure investments and project delays.
South Africa faces ongoing rail logistics issues and a deepening electricity crisis, further exacerbating costs for businesses like ArcelorMittal. Faced with these challenges, the company's board and management find themselves compelled to initiate a process considering the wind-down of the Longs Business, possibly placing it in care and maintenance. The potential job losses encompass both full-time employees and contractors.
In the first half of the year, ending on June 30, the company reported a headline loss of 448 million rand, a stark contrast to the 3 billion rand profit recorded in the same period the previous year. This financial downturn is attributed to South Africa's electricity crisis, high inflation rates, and weakened demand from crucial steel-consuming sectors.