Table of Contents
Key Points
- ArcelorMittal South Africa maintains the closure of its Newcastle and Vereeniging plants, resulting in 3,500 job losses.
- The decision follows rising costs, competition from low-cost imports, and declining market demand.
- The company has dismissed reports of a potential R1 billion ($53.5 million) rescue package, confirming that the shutdown plans remain unchanged.
ArcelorMittal South Africa (ArcelorMittal SA), the Gauteng-based steelmaker partly owned by South African businesswoman Noluthando Gosa, has officially closed its Newcastle and Vereeniging steel plants. This decision comes just 25 days after the company announced plans to wind down its Longs steel division, fueling speculation about government intervention.
The closure of the Longs unit signals a significant shift in ArcelorMittal SA's operations, deepening its financial struggles and putting 3,500 direct and indirect jobs at risk in the surrounding communities.
ArcelorMittal sticks to plant closure plans
Despite speculation that the South African government might step in with a R1 billion ($53.5 million) bailout, ArcelorMittal has firmly rejected these claims. The company confirmed that its plans to close the plants and begin retrenchments on February 6, 2025, remain unchanged.
Mokhele Morabe, ArcelorMittal's head of employee relations, addressed the bailout rumors in a statement, clarifying that the company had not been approached by the Department of Trade, Industry, and Competition (DTIC). “ArcelorMittal South Africa has no information regarding a R1-billion bailout,” Morabe said. “This matter has not been discussed with the company. However, we remain open to engaging with the government on sustainable solutions.”
The company has made it clear that it can no longer sustain its loss-making operations, with continued financial strain threatening its overall stability.
Plant closures highlight South Africa's struggles
Part of a broader restructuring effort, the closures come at a time when the company, which is listed on the Johannesburg Stock Exchange with a market capitalization of R1.38 billion ($73.9 million), faces ongoing challenges within South Africa’s industrial sector.
ArcelorMittal has an annual production capacity of 7 million tonnes and serves key industries, including construction, automotive, and manufacturing. This restructuring is part of an effort to address long-standing operational issues.
Noluthando Gosa, an influential leader and non-executive independent director at ArcelorMittal South Africa, holds a 6.15 percent stake in the company, highlighting her significant influence within the business. Alongside operational challenges, the company rejected a $1 billion acquisition offer from Networth Investments in October 2024, signaling its commitment to long-term strategy and growth.
The plant closures underscore the difficult balancing act facing South Africa’s industrial sector, where businesses grapple with financial survival while addressing broader social responsibilities. With government support still uncertain, the company’s future hinges on both potential financial intervention and a broader policy response.
