ArcelorMittal keeps two plants open, saves 3 500 jobs

ArcelorMittal South Africa (Amsa) has decided to halt the closure of its long steel product operations at plants in Newcastle, KwaZulu-Natal, and Vereeniging, Gauteng, saving thousands of jobs.

The company said “green shoots” within the manufacturing sector led to the decision to not close the plants. It is believed that the absence of load shedding will also contribute to the improvement of the sector.

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Growth and stability

“The increase in power generation in recent months, coupled with the renewable energy projects scheduled to come on stream over the next two years, suggests that the drag on economic growth caused by the electricity shortage should gradually diminish, facilitating structurally higher production levels.”

Amsa’s main focus is on the upgrade and expansion of the national logistics’ infrastructure and the electrical supply grid (including new renewable energy capacity) as they have shown positive growth. Renewable energy in the country brings opportunities for investors. The Freight Logistics Roadmap has been developed to stabilise the operational performance of freight rail, currently a severe constraint, most notably for commodity exports.

Transnet plans to invest R160 billion to address national infrastructure requirements. Transnet also aims to deepen and lengthen two berths at its Durban Container Terminal Pier 2. The Draft Rail Private Sector Participation Framework targets to provide an interim approach to enable private sector participation, including third-party access to the freight rail network. 

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Negotiations with organised labour

The Amsa board and management met with various stakeholders which had positive outcomes, except for the discussions with organised labour.

“Disappointingly, discussions with organised labour to reduce the costs structure of the longs business were unsuccessful, as the trade unions rejected all reasonable efforts to find a solution which would have assisted the competitiveness of the company and especially that of the longs business.”

However, negotiations with Transnet to guarantee port and rail service efficiency are at an advanced stage.

“With the oversupply in the global steel markets and commensurate trade actions taken by almost all major steel producing countries, it is pleasing to see a renewed determination by South Africa to respond appropriately to ensure a level playing field for South African manufacturers.”

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Results of instability at Vanderbijlpark plant

Amsa said the flats steel product operations in Vanderbijlpark experienced instability at its blast furnaces in two consecutive months due to chilled hearth conditions.

“Blast Furnace C returned to operation on 1 May following a three-week outage, and Blast Furnace D returned on 29 May after a five-week outage. As the business was preparing for a Q2 2024 shotcrete repair for Blast Furnace C, steel inventory levels had been increased.”

The increase enabled the continued supply of inventory to customers, while surplus inventory destined for export jurisdictions were mainly re-routed to the domestic market. But Amsa is confident the volume of sales which were lost will be recovered in the second half of the year.

“The longs business broadly performing within expectations, the financial results for the six months ended 30 June 2024 will be negatively impacted by the difficult domestic and regional trading conditions, and by the two-week sales volume impact and high direct cost of the operational interruptions of the two blast furnaces at Vanderbijlpark.”