ArcelorMittal South Africa (AMSA) has again warned that its Long Steel business may shut down despite receiving billions in funding from the state-owned Industrial Development Corporation (IDC). <\/p>\n\n\n\n
The company has repeatedly threatened to close the business amid high energy costs, logistics constraints and a scrap export tax issue. <\/p>\n\n\n\n
The Longs Business is crucial in producing specialised steel for several industries across South Africa, such as auto makers and other manufacturers. <\/p>\n\n\n\n
The shutdown of the mills would lead to a direct loss of approximately 3,500 jobs, but the sector indirectly supports more than 100,000 jobs, which would also be impacted.<\/p>\n\n\n\n
In addtion, the business supplies up to 400,000 tonnes of steel products that can\u2019t currently be manufactured by any other companies in South Africa.<\/p>\n\n\n\n
Identifying the risk and impact, AMSA received an IDC funding bailout earlier this year, which enabled the it to defer the winding down of the business while longer-term solutions could be found.<\/p>\n\n\n\n
The IDC facility is repayable by agreement between the parties and is based on the performance, solvency and liquidity of Longs Business.<\/p>\n\n\n\n
However, the facility is expected to reach its end in September, with AMSA now warning that it may have to start winding down operations as soon as August to avoid wider group distress.<\/p>\n\n\n\n
In its interim financials for the first half of 2025, the group said its Longs Business continues to face challenging operating conditions. <\/p>\n\n\n\n
Input costs, especially for energy and transport, continued to exert upward pressure on production costs, and, despite all “reasonable efforts” to improve sustainability, the business remained loss-making.<\/p>\n\n\n\n
\u201cThus, while the IDC facility provided time-limited funding relief, it did not alter the underlying economic realities,” AMSA said.<\/p>\n\n\n\n
The primary focus area for the Longs Business has been the re-establishment of a strong local market presence and cost reduction initiatives, especially in the raw material basket and lower energy costs. <\/p>\n\n\n\n
Without a solution to secure the sustainability of the Longs Business, the group warned that there might be no option but to commence the shutdown of the Blast Furnace in early August<\/strong>. <\/p>\n\n\n\n This would mitigate the risk of exposing the company to adverse earnings and cash flow impacts beyond September 30, when the existing IDC facility expires. <\/p>\n\n\n\n In this event, operations at the Longs Business would be placed into care and maintenance.<\/p>\n\n\n\n Group revenue declined by 17% to R17 billion due to lower sales volumes, softer average prices, the cost of electrical supply difficulties and additional unplanned road transport. <\/p>\n\n\n\n The group\u2019s overall headline loss of R1.01 billion which was slightly worse than the 2024 H1 loss of R1.11 billion. The group\u2019s headline loss per share increased 9% to 91 cents per share. <\/p>\n\n\n\n With the group still facing a loss, no interim dividend was declared over the period.<\/p>\n\n\n\n ArcelorMittal South Africa has once again warned that it may shut down its Longs Business, despite billions in funding from the state. <\/p>\n","protected":false},"author":95,"featured_media":805758,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[19235,625],"class_list":["post-833638","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-amsa","tag-idc"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=833638"}],"version-history":[{"count":7,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833638\/revisions"}],"predecessor-version":[{"id":833668,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833638\/revisions\/833668"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/805758"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=833638"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=833638"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=833638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Item<\/th> 2024<\/th> 2023<\/th> % Change<\/th> FY 2024<\/th><\/tr><\/thead> Revenue (R millions)<\/strong><\/td> 17 118<\/td> 20 506<\/td> (16.5%)<\/td> 38 596<\/td><\/tr> EBITDA before exceptional items<\/strong><\/td> (394)<\/td> (221)<\/td> 78.3%<\/td> (1 816)<\/td><\/tr> EBITDA<\/strong><\/td> (110)<\/td> (221)<\/td> (50.2%)<\/td> (2 947)<\/td><\/tr> Loss from operations<\/strong><\/td> (533)<\/td> (542)<\/td> (1.7%)<\/td> (4 447)<\/td><\/tr> Net loss<\/strong><\/td> (932)<\/td> (1 214)<\/td> 23.2%<\/td> (5 839)<\/td><\/tr> Headline loss<\/strong><\/td> (1 014)<\/td> (1 110)<\/td> 8.6%<\/td> (5 102)<\/td><\/tr> Net asset value<\/strong><\/td> 1 034<\/td> 6 587<\/td> (84.3%)<\/td> 1 963<\/td><\/tr> Loss per share (cents)<\/strong><\/td> (84)<\/td> (109)<\/td> 22.9%<\/td> (524)<\/td><\/tr> Headline loss per share (cents)<\/strong><\/td> (91)<\/td> (100)<\/td> 9.0%<\/td> (458)<\/td><\/tr> Dividends per share (cents)<\/strong><\/td> 0<\/td> 0<\/td> –<\/td> 0<\/td><\/tr> Net asset value per share (R)<\/strong><\/td> 0.93<\/td> 5.91<\/td> (84.3%)<\/td> 1.76<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"