ArcelorMittal calls off a plan to close South African steel plant

03 Jul 2024 CW Team

ArcelorMittal's South African division has opted not to close its steel plant that manufactures rolled bars, instead focusing on developing a plan to ensure its viability, more than six months after initially announcing its intention to shut it down. In January, the world's second-largest steelmaker postponed the closure of the business for up to six months while engaging with government and labour to address profitability issues and prevent job losses. In a trading update, ArcelorMittal South Africa stated, "The board and management have decided that the longs (steel) business will continue to operate to allow an opportunity for the short, medium, and longer-term initiatives aimed at securing its sustainability to be fully explored." Located in Newcastle, KwaZulu-Natal province, the plant produces fencing material, rail, rods, and bars essential for sectors like construction, mining, and manufacturing. When the closure was initially announced last November, ArcelorMittal cited weak demand and ongoing infrastructure challenges in South Africa's most developed economy. The company also criticised policies favouring scrap metal over iron ore in steel production. ArcelorMittal South Africa highlighted improvements in electricity supply as well as efficiencies in ports and railways. The expiration of a steel scrap export ban in December 2023 has begun to level the playing field in input cost structures between integrated steelmakers like ArcelorMittal and scrap-based producers, according to the company. To support ongoing operations, the company secured a working capital facility of $54.29 million. Despite stable performance in its long steel operations during the six months ending June 30, ArcelorMittal anticipates increased losses due to challenging trading conditions and disruptions at its Vanderbijlpark furnaces, where flat steel products are manufactured.

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