All ArcelorMittal South Africa offices and operations across the country have been closed during the lockdown period and employees are staying home, except for essential operational staff who are required for care and maintenance to avoid damage to plant and equipment, as permitted in terms of the regulations.

According to the regulations published in the Government Gazette No 43168 of 26 March 2020, all businesses except those involved in the manufacturing, supply, or provision of essential goods or services, should cease operations. In any manufacturing operation, and especially one that requires high levels of energy for production, shutdowns are complicated. Accordingly, ArcelorMittal South Africa’s Vanderbijlpark Works shut down its rolling operations the day before the lockdown began and both blast furnaces were prepared and shut down in the days that followed. One coke battery remains fully operational to provide the necessary energy to hot idle the other batteries.

“Currently, more than 95% of ArcelorMittal South Africa’s customers are closed for business in accordance with the nationwide lockdown,” said Kobus Verster, Chief Executive Officer of ArcelorMittal South Africa.

Once the lockdown has been lifted, ArcelorMittal South Africa plants, including the Vanderbijlpark Works, will restart operations in a logical sequence to enable the business to provide product according to steel demand. The rolling operations will start first to produce finished products for customers, and soon after, the iron facilities will be prepared to start production of iron and steel for the operation.

“While we understand and support the need for the nationwide lockdown, this is likely to result in further pressures on the business, over and above the effects of an already struggling economy that have severely impacted the South African steel sector,” explained Verster.

ArcelorMittal South Africa board and management took several steps in 2019 to ensure the sustainability of the company in these difficult times.

These included the large-scale labour reorganisation concluded at the beginning of the year, the Strategic Asset Footprint Review which resulted in the decision to place the Saldanha Works into care and maintenance, and the review of the Newcastle Works, which is now primarily focused on servicing the domestic and Africa Overland markets. Further, the reduction of sub-contractors, reconfiguration of the operating model and the various corporate actions aimed at strengthening the balance sheet (including the sale of non-core assets), are continuing.

However, the anticipated impact of COVID-19 on the economy has led the company to consider even greater measures to ensure its sustainability. Several temporary interventions have been implemented, including curtailment of expenditure on non-critical goods and services, short time, and salary reductions for all employees with effect from April 2020 and likely to last for three months. The company is also accessing measures introduced by government to assist companies and employees, such as the revised UIF benefits. Further, where appropriate, force majeure notices have been issued by the company to its customers and suppliers.

“This brings unprecedented challenges for everyone and we need to work together as a community to support each other through these difficulties,” adds Verster. “We are proud of the ongoing support and commitment of our employees during this challenging time and we sincerely appreciate the services of our employees who have been required to work during this lockdown period,” concluded Verster.