Minister of Trade and Industry Ebrahim Patel has told Parliament in a written reply that while Arcelor Mittal South Africa is still planning on closing its Saldanha Steel facility, the Department of Trade and Industry is considering mechanisms to sustain operations and preserve jobs in the area's steel sector.
AMSA announced in November that it would be closing Saldanha Steel, following an operational review of its assets. When the news emerged of the possible shutdown, it was feared that 900 people could lose their jobs.
Democratic Alliance MP Erik Marais asked Patel whether there were any interventions that the Department of Trade and Industry was considering in order to prevent the closure of the Saldanha steel factory.
Patel said government urged AMSA to offer them terms that would enable operations at the steel-mill and employment opportunities to the local community.
He said the department would work on interventions as South Africa was one of the only major primary steel producing countries on the African continent.
"The African Continental Free Trade Area, which will come into effect in July 2020, is expected to open up additional demand for primary steel across the continent, as countries build the required infrastructure and factories needed to take advantage of the expected increase in intra-regional trade," said Patel.
Patel said challenges facing the South African steel sector included global oversupply. However, he said initiatives like the AfCFTA provide opportunities to drive increased regional demand for steel in construction, automotive manufacturing and mining.
"We have embarked on the process to develop a master plan for the steel and metals value chain in South Africa, which will include both demand- and supply-side measures and bringing greater competitiveness and dynamism to the entire steel and metals industry," Patel said.
He said, upon meeting with AMSA, that the department urged AMSA to review and reverse this decision and find solutions to keep Saldanha Steel in operation.
"The combined support package offered by government ranged from concessions on iron ore pricing, electricity, water and rail tariffs, [to] providing considerable cost savings. AMSA has asked for support, however, in excess of what was made available through the efforts of government," he said.
Patel said in a bid to support the entire steel and metals value chain, government brokered a pricing agreement allowing the upstream steel mills to remain sustainable in the domestic market, while providing a competitive fair price for the downstream industry.