ArcelorMittal South Africa announces continued operation of Longs Business
AMSA said they were also pleased with an improvement in Transnet's performance and negotiations to guarantee port and rail service efficiency are at an advanced stage.
Newcastle can breathe a sigh of relief with the announcement that ArcelorMittal South Africa, AMSA, will continue with its Longs Business locally.
This follows the decision in February to defer the wind-down of the Newcastle plant for six months after AMSA had last year announced the decision to close down the Longs Business.
Kobus Verster, Chief Executive Officer of ArcelorMittal South Africa, said in a statement that ‘despite overall weak market conditions and difficult trading environments, the manufacturing sector has shown some encouraging signs of growth.’
“Manufacturing production increased by 5.3% year-on-year and 5.2% month-on-month in April, marking the largest monthly increase since August 2021. The absence of load-shedding, if sustained, is expected to contribute further to this improvement. The latest manufacturing growth forecast for 2024 stands at 1.1% year-on-year.”
He stressed that the Board and Management of ArcelorMittal South Africa ‘remained acutely aware of the potential impact that closing the Longs Business would have on the beneficiation and manufacturing value chain, overall industrialization in the country, jobs, and the local economy, particularly in Newcastle’.
“Despite progress being slower than anticipated and some disappointments along the way, we are committed to fully exploring all avenues to secure the sustainability of our long-term business, ” Verster said.
“The Longs Business remains fully operational, with all facilities continuing to operate and effectively servicing its markets and customers.”
He outlined the progress made on short-term initiatives that decided the decision not to close the Longs Business.
These include the expiration of the steel scrap export ban in December 2023 which helped create greater fairness and equity in the input cost structures between integrated and scrap-based primary steel producers.
AMSA said they were also pleased with an improvement in Transnet’s performance and negotiations to guarantee port and rail service efficiency are at an advanced stage.
In a bid to counter the global steel market oversupply, South Africa has shown renewed determination to ensure a level playing field for local manufacturers and a ‘safeguard duty’ of 9% is to be implemented on certain hot-rolled steel products by the International Trade Administration Commission (ITAC).
Vertser said AMSA had accessed a working capital facility of R1 billion to support ongoing operations.
However, he was disappointed that discussions with organised labour to reduce the cost structure of the Longs Business were ‘unsuccessful, as trade unions rejected efforts to find solutions that would have enhanced the company’s competitiveness.’
“While these short-term initiatives only partially address the structural sustainability of the Longs Business, progress is being made on medium- and longer-term interventions. These include advancing local mineral beneficiation policies for iron ore to supply regional demand and promoting local supply for local demand in key economic sectors and state-owned enterprises.”
He was pleased that the Longs Business has maintained operational stability throughout the first half of 2024.
“With the Longs Business broadly performing within expectations, the financial results for the first six months is expected to be negatively impacted by challenging domestic and regional trading conditions, as well as the operational interruptions at the Vanderbijlpark blast furnaces.
“However, due to intensive cash management actions, the net borrowings position is anticipated to remain within tolerable levels. The second half of 2024 is expected to more accurately reflect the underlying business performance.”
The news provided to you in this link has been investigated and compiled by the editorial staff of the Newcastle Advertiser, a sold newspaper distributed in the Newcastle area. Please follow us on Youtube and feel free to like, comment, and subscribe. For more local news, visit our webpage, follow us on Facebook and Twitter, and request an add on our WhatsApp (082 874 5550).
