Government’s plan to save 100,000 jobs in South Africa

The Department of Trade, Industry and Competition (the DTIC) intends to find a working solution for ArcelorMittal South Africa’s long steel business following a closure notice, with 100,000 jobs potentially on the line.

AMSA announced that it would close its Longs Business earlier this week following a period of poor financial performance.

In November 2023, the company said that it planned to put its Longs Business into care and maintenance amid prolonged weak economic conditions, logistics and energy challenges, as well as unsustainable competition from low-cost imports.

The group engaged with various stakeholders throughout 2024 to find short- and longer-term interventions, with operations extended to provide time for securing solutions.

“While the company appreciates the support from government and other stakeholders, and having made some progress with the identified initiatives, these have not been adequate,” said AMSA.

“Persistent high logistics and energy costs, combined with insufficient policy interventions, especially those policy decisions made some time ago (mainly, PPS and Export Scrap tax) has left the Longs Business unsustainable.”

“Despite all efforts, unfortunately, the package of initiatives sought has not materialised to a level that will change the fundamentals of the structural problems the company has been experiencing in the Longs Business.”

The group said that it had no choice but to proceed with the winding down of the Longs Business.

AMSA said that roughly 3,500 direct and indirect jobs may be affected by the closure, but the total number of retrenchments will depend on agreed alternatives and consultation outcomes.

However, Rand York Casting CEO Justin Corbett warned that the closure could be disastrous for the local steel industry.

Corbett told Newzroom Afrika that 3,500 jobs are just the tip of the iceberg, as an additional 50,000 could be lost in South Africa in the short term, which could rise to 100,000 jobs in the medium term.

He noted that it is the most complex steel maker in South Africa in terms of its capability, with 32% of the steel produced in South Africa being unique to AMSA.

This will have severe consequences for other steel industries in South Africa, with AMSA the only producer of high-tech products required by mining and automotive companies.

The 100,000 job losses are linked to Original Equipment Manufacturers discontinuing their manufacturing of a particular line in South Africa.

Department responds

The DTIC said that it remains committed to working with the private sector in growing the local economy, and remains committed to working with AMSA to find a workable and lasting solution.

During the 2024 engagements, AMSA had requested several concessions for its business by various government departments and state-owned entities.

Minister of Trade, Industry and Competition, Parks Tau, thus decided to form a comprehensive and coordinated approach to resolve the issues raised by AMSA.

This included a technical working group made up of several stakeholders including the DTIC, AMSA, the departments of Electricity and Energy, Transport, as well as Eskom, Transnet and Private Sector Stakeholders.

The working group held regular engagements up until December 2024,

“It has always been, and continues to be the intention of the government to continue these engagements until a workable resolution to the problems faced by AMSA and the steel industry is reached,” said the DTIC.

“The steel industry is critical in the reconstruction and recovery plan for the South African economy, particularly, the manufacturing, mining, construction, engineering, and transportation sectors, which are at the centre of the industrialisation, localisation and beneficiation programmes of government.”

“Whilst the immediate task will be on addressing structural issues affecting AMSA’s longs steel business, the broader focus should also be on addressing productivity improvements and supply chain efficiencies, investments in low-carbon technologies, competitiveness and regaining the market share.”

The department added that it is important for public and private sector entities and companies to commit themselves to procuring locally manufactured steel products in their projects.

The department said that commitment to buy locally will contribute positively to aggregate demand, job creation and economic growth in South Africa.

Read: The rand did better than you think in 2024 – what 2025 could look like