Major job cuts in South Africa halted – for now
ArcelorMittal South Africa (AMSA) has announced that it will delay the shutting down of its Longs Business by six months, potentially saving thousands of jobs.
In November 2023, the group said it would wind down its Longs Business due to the challenging steel environment in 2023, which was characterised by low demand in almost all markets and prices under pressure.
Steel and Engineering Industries of Southern Africa (SEIFSA) said that the closure would result in 3,500 job losses.
Since the announcement, the Minister of Trade, Industry and Competition, Transnet, numerous industry associations, organised labour, affected suppliers, community forums, and customers have engaged with AMSA.
The group said that the government needs to address the structural constraints affecting the steel industry.
As a result of the various engagements, specific short-, medium- and longer-term interventions were identified, with the group announcing the deferral of the wind-down of the Longs Business for up to six months.
Short-term initiatives being progressed include addressing the port and rail inefficiencies at Transnet, not extending the export ban on steel scrap, which gave a cost advantage to lower quality steel makers, expediting demand-side opportunities, key customers agreeing to longer-term volume commitment and localisation efforts, and working with suppliers to reduce costs.
“AMSA will continue to monitor its working capital requirements over the deferral period, which will extend for a period of up to six months, to ensure that there is sufficient access to liquidity,” the group said.
“In this regard, in the interest of prudent liquidity management, the Company is in the process of applying for an additional working capital facility up to R1 billion, which may be called upon to support continued operations.”
“Although the short-term initiatives do not fully address the structural shortcomings highlighted before, AMSA has confidence that the deferral of the wind down decision enabling the Longs Business to continue to operate for a period of up to six months, combined with the commitment from many of the Company’s affected partners, will provide enough time to cement and implement the agreed medium- and longer-term interventions.”
Finances
The challenges facing the steel industry were clear to see in the group’s financial results for the year ended 31 December 2023, with the group posting a headline loss of R1,890 million (2022: R2,607 million profit)
The group also posted a loss per share of 352 cents after impairment charges of R2,115 million (2022: earnings of 236 cents per share)
It also saw a 170 cents loss per share in its headline earnings per share (2022: headline earnings of 234 cents).
Amid these struggles, the group did not declare a dividend for the period under review.
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