The Western Cape government said it was “devastated” by the news that Arcelor Mittal SA’s steel works plant in Saldanha will be shut down, and that the decision will be a blow to the regional economy.
“We have urged national government to assist the company by reducing electricity and freight costs, by exploring alternative energy sources, and by including the company in the Saldanha Bay Industrial Development Zone. We have also provided water tariff relief via the Saldanha Bay Municipality to assist the company to reduce costs at the steel works plant in Saldanha,” the provincial government said in a statement on Monday.
But it added that the interventions were not enough to save the plant, and it will now contact the company to find out whether can offer assistance to the employees who are likely to be affected in Saldanha.
Earlier on Monday, ArcelorMittal South Africa [JSE: ACL] announced that it will wind down its steel operations at Saldanha, which have been suffering “severe financial losses”.
Netwerk24 reports that 900 people, which include permanent staff and contractors, will be affected.
As part of a strategic review of its operations, the steel manufacturer found that its Saldanha operations had lost their competitive cost advantage to compete in the export market, "mainly due to raw material and regulated prices".
ArcelorMittal says Saldanha’s losses were forecast to continue for the foreseeable future. The plant’s production facilities will be shut down, which will leave it only on “care and maintenance” by the first quarter of 2020.
“This difficult decision was taken in the context of constructive ongoing engagements with key stakeholders, including government and organised labour, to find alternative solutions to the dire situation in the South African steel industry,” the company said.
Sales orders will be fulfilled from the group's Vanderbijlpark Works.
The company is still deciding on the future of its Newcastle operations, and certain of its long steel products rolling facilities.
“Exploration of the benefits of a concentrated operating footprint will be of foundational importance during this phase of the review.”
The company, which announced planned retrenchments as part of “large-scale restructuring” in July, has concluded the CCMA-facilitated consultation process and will now implement the “outcomes” from the process, it said.