ArcelorMittal may close some of its South African plants

In a statement on Wednesday, ArcelorMittal South Africa [JSE: ACL] – the biggest steel producer on the continent - announced that it may close some of its operations.

The company, which supplies more than 60% of the steel used in South Africa, has operations in Vanderbijlpark, Vereeniging, Saldanha and Newcastle.

South African steel consumption is at its lowest levels in a decade – currently 30% lower than in 2007 – which has hit ArcelorMittal. In the six months to end-June, its revenue declined by 5% due to lower sales volumes. It suffered a headline loss of R638m, with net debt growing to R1.7bn from R500m six months earlier.

The company said in a statement that it is currently reviewing the "operational and financial sustainability of certain of its major operating sites, individual plants and production areas". This will exclude its commercial coke operations, and won’t impact its planned acquisition of the Highveld Structural Mill.

The outcome of the review may result in the closure of some of these operations, ArcelorMittal SA said.

The company is already in talks with employees about possible retrenchments. In its statement on Wednesday, it said these consultations should be finalised by the fourth quarter of 2019.

More than 2 000 of the company’s 8 700 employees may be affected by the retrenchments, with Numsa warning that even more workers are at risk.      

Last month, Solidarity asked government to intervene as it expressed concern that while the company blamed "power tariffs, steel imports and rail freight tariffs" for the retrenchment plans, ArcelorMittal SA still had capital to make a R300m offer to acquire Highveld Steel's heavy structural mill.

Established in 1928, the company previously known as Iscor was acquired in 2006 by ArcelorMittal.

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