ArcelorMittal South Africa confirms closure of Newcastle Longs Business

The closure, first announced last year, was confirmed on Friday by ArcelorMittal South Africa CEO, Kobus Verster, who said the company was deeply disappointed that, despite assurances and efforts, there had been no formal responses from the Department of Trade,

Industry, and Competition (DTIC) or National Treasury that would have helped to stave off the closure.

“The closure will have a detrimental impact on Newcastle. The shutdown of the blast furnace is scheduled to begin this week with the last steel from the Longs Business expected to be produced by late March to early April. The business will transition into care and maintenance by the second quarter of 2025,” Verster said.

The shutdown, initially set for January 2025, was pushed back by one month to fulfil a higher-than-expected order book, particularly for automotive and seamless tube customers.

When ArcelorMittal South Africa made the shock announcement that it would close its Longs Business in Newcastle, it submitted key priorities that would assist in keeping the business alive.

These include the policy that benefits scrap metal over iron ore, the lack of progress on improving port and rail efficiency, with Transnet declining to negotiate improved tariffs compounded that there will be a tariff hike and the failure to negotiate a cost-effective energy tariff with electricity costs to increase by 12.74% from April 1 further undermining ArcelorMittal South Africa’s competitive position at a time when energy costs are already prohibitive.

Verster lamented that the implementation of duties and the safeguard on hot rolled coil have failed to materialize, leaving the steel industry exposed to intensified import competition.

“Despite the company’s repeated submissions of evidence demonstrating the adverse impacts of current policies, ArcelorMittal South Africa has received no formal communication from either the DTIC or National Treasury regarding the removal of the export tax or review of the Price Preference System. This continued policy inaction, combined with deteriorating cost structures, has accelerated the decline in operating conditions beyond what was initially assessed earlier this year.”

In a statement released on March 3, the Department of Trade, Industry and Competition ‘noted’ AMSA’s decision to wind down its long steel business.

The department acknowledged the significance of the steel industry in South Africa’s economic reconstruction and recovery and assured all stakeholders that the government is actively engaging with AMSA to find a solution that will maintain long steel capacity in the country.

Plea to President Ramaphosa and Verster to intervene in AMSA closure:

An impassioned plea has been made to President Cyril Ramaphosa and Kobus Verster, ArcelorMittal South Africa’s (AMSA) CEO to intervene in a last ditch effort to stave off the closure of AMSA’s longs steel plant in Newcastle.

In a letter addressed to both men, Johan Pieters, chairperson of the Newcastle Growth Coalition Chapter, warned that the closure would deeply affect the 3,500 employees and the broader community of Newcastle.

“This decision has significant implications for our community, and I feel compelled to address it,” Pieters writes.

“My late father spent 41 years working for Iscor, and later ArcelorMittal.

His story mirrors that of many in Newcastle, where AMSA has been a cornerstone business for decades.

“However, the recent news of the closure has left us deeply concerned, especially in light of the various challenges the company has faced.”

He goes on to point out four factors Verster highlighted that led to the decision to shut down the plant.

These include:

• Scrap advantage over iron ore: The export tax continues to disadvantage steel producers using Electric Arc Furnaces.
• Port and rail inefficiency: There has been little progress in improving these key logistics sectors.
• Energy costs: Stalled negotiations with Eskom have left energy prices unaddressed.
• Trade measures: The failure to implement the necessary trade measures and the lapse of the provisional safeguard on Hot Rolled Coil have further compounded the situation.

“Despite AMSA’s efforts, including supportive meetings with Trade Investment KwaZulu-Natal and the KZN Government in December 2023, and the establishment of a National Working Committee by the President’s office in 2024, AMSA made the announcement to close.

Furthermore, repeated appeals for government intervention have yielded limited progress”, Pieters added..

“We understand that discussions took place in Davos involving Mr. Mittal, President Ramaphosa, and other ministers, yet follow-ups for updates have not resulted in any clear communication or actionable responses.

“Mr. Verster, your statement in the Business Times highlighted the devastating impact on the economy and the potential loss of thousands of jobs. I also read that a group of black businesses is interested in acquiring AMSA’s Newcastle operations. Will AMSA consider selling the operations at a market-related price, or are there other plans in place?
“Mr. President, has the government failed to provide a timely response to AMSA regarding a way forward in the past 30 days?”

Pieters concludes urging President Ramaphosa and Verster to meet to discuss the AMSA closure.

“As a businessman and a resident of Newcastle, I advocate for every family and business impacted by this decision, and I sincerely hope that the National Government and AMSA can find a solution that safeguards our town and its people.”

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