Arcelormittal South Africa (SA) on Monday became the latest casualty of plunging steel prices and slowing demand, saying it would mothball two operations and review the viability of its largest steel mill.
It had “no option but to commence consultations” with employees and others affected by the closure of the melt shop and forge at its Vereeniging specialised steel works, it said.
SA’s largest steel company also said it would review its unprofitable main Vanderbijlpark works and group corporate services by the end of October.
It said: “Despite our best efforts, and given our assessment that the outlook is not about to change in the foreseeable future”, it had opted for the restructuring.
On Friday the government announced a 10 percent tariff on steel imports, aiding two of ArcelorMittal’s products.
But the tariff would only be of assistance in the medium-to long-term and trading conditions had continued to worsen, the company said.
About 400 direct employees and contract service employees will be affected by the closures.
Molten steel is processed at the melt shop. Forge products, such as axles and spindles, are manufactured for the construction, rail and armament industries, it said.
The National Union of Metalworkers of SA (Numsa) said it supported the government’s call for a moratorium on retrenchments and would “defend jobs”.
Gideon du Plessis, general secretary of Solidarity, said the trade union had signed a “plan” to limit retrenchments in the mining sector. The mining industry was a major customer of the steel industry.
SA’s second-largest steel maker Evraz Highveld Steel & Vanadium, based in Emalahleni, is in business rescue. It is holding a creditors’ meeting today to ascertain whether it will be able to save parts of the company.
ArcelorMittal SA said it had been “engaging extensively” with the government on the imposition of protective tariffs and antidumping duties on growing Chinese steel imports.
It also wanted more domestically produced steel products to be used in state infrastructure projects.
Two weeks ago, labour and business jointly presented to the government 10 “core collective demands” to prevent a tsunami of job losses in SA’s steel sector.
Among the demands were the imposition of tariffs to stop cheap steel imports from China; the designation of steel for government infrastructure spend; the “urgent roll-out” of the state’s 18 strategic integrated infrastructure projects; and delaying the implementation of the proposed carbon tax on the sector.
