No solution yet to potential ArcelorMittal job losses as CEO calls out ‘unfairness’

Employment and Labour Minister Nomakhosazana Meth has warned that the closure of two ArcelorMittal plants could have a significant ripple effect on other industries.

Meth met with ArcelorMittal management on Friday following the steel manufacturer’s announcement last month of its decision to close plants in KwaZulu-Natal (KZN) and Gauteng.

The company cited the rising costs of transport and fuel, alongside persistently low demand for steel, as primary reasons for the closures.

ArcelorMittal has already commenced consultations with unions and initiated the Section 189 retrenchment process.

Efforts to prevent ArcelorMittal closures and save jobs

Addressing the media at the Vanderbijlpark Metal Works plant on Friday, Meth indicated that the meeting aimed to explore possible interventions to protect jobs.

“We are here because we are a concerned partner,” she said.

While the discussions were productive, the minister made it clear that no immediate solution had been reached.

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“At the end of the day, the interests that we have in common, both us as government and ArcelorMittal as the business, is to ensure that the business continues and that there are no jobs that are lost,” Meth said.

“But unfortunately, because of the economic situation of the country and also the global issues that sometimes, from time to time, affect the work that the business is doing and also by so doing, impacting negatively all what government wants to see, in particular, in terms of economic growth and ensuring that there is job security,” the minister added.

Job losses and economic impact

Meth explained that the closure of the plants could impact not only 2 000 direct jobs, but also 1 300 indirect jobs, such as those of subcontractors.

She also highlighted potential ripple effects on other industries, including the automotive manufacturing sector.

“Beyond that, there are also upstream and downstream jobs that will be affected if this plant finally closes down, and the number is scary,” the minister warned.

READ MORE: Unions not happy with ArcelorMittal closing long-steel business

“The CEO was telling us, even though there is a number of 16 000 Toyota [jobs at risk], there are other businesses that, because of the ripple effect of this plant closing down, may lead to a loss of close to 80 000 to 100 000 jobs.”

Meth appealed to ArcelorMittal to allow the Department of Employment and Labour more time to implement a proposed intervention strategy, which includes the Temporary Employer/Employee Relief Scheme (TERS) to mitigate the impact on affected workers.

Not all hope is lost in the ArcelorMittal matter. We appreciate the opportunity to meet with the team for fruitful discussions. Working together with other Government departments and stakeholders, we will do the best we can to salvage the situation🇿🇦🇿🇦@deptoflabour #LabourMatters pic.twitter.com/3svUXnSFZQ

— Nomakhosazana Meth (@Meth_Khosi) January 17, 2025

ArcelorMittal’s challenges

ArcelorMittal CEO Kobus Verster highlighted that the company’s challenges were rooted in low demand and high operational costs.

“I think demand won’t change overnight, but it doesn’t mean a company has to be making a loss in a low-demand scenario.

“So we’re comfortable that you make fewer profits, and when the market returns, you go to a normalised business environment,” he said.

READ MORE: ArcelorMittal SA plunges 27% on Newcastle and Vereeniging plant closures

Verster emphasised that the company would continue to advocate for a level playing field to ensure a conducive environment for steel manufacturing.

“So those cost issues that were well publicised in terms of energy and rail, those need to be addressed. The unfairness in terms of the tax preferential price system and the export tax, those need to be addressed.”

“We have complicated issues, but there are a lot of people willing and able to work at it hard, and sometimes we can find interim solutions to see how we address the issues longer term,” the CEO continued.

Call to protect policies

Meanwhile, the South African Communist Party (SACP) has urged Trade, Industry, and Competition Minister Parks Tau to intervene in the situation.

The party called on the government to protect “critical industrial policy instruments”, such as the preferential price system and export tariffs on scrap metal.

“Decisive action must also be taken against the illegal ‘scrap metal trade,’ particularly the looting of public infrastructure and theft,” said SACP national spokesperson Alex Mohubetswane Mashilo.

“Calls to dismantle such measures are unreasonable and must be rejected outrightly.”

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