R1,683 billion bailout saves AMSA – for now
A R1,683 billion bailout has staved off the closure of ArcelorMittal South Africa's (AMSA) longs steel plants in Newcastle and Vereeniging, saving nearly 3,000 jobs and sparing the local economy from going into a tailspin.
Kobus Verster, CEO of ArcelorMittal, confirmed on Monday that the wind-down of the longs steel business has been deferred until at least August 31.
This follows a funding agreement with the Industrial Development Corporation of South Africa SOC Limited (IDC).
The funding is repayable subject to agreement between the parties and contingent on the financial performance, solvency and liquidity of the longs steel business.
The retrenchment of workers has also been stopped with AMSA receiving a Temporary Employee Relief Scheme (TERS) grant to assist in funding employee costs.
Verster said AMSA would continue to consider various strategic alternatives, and as such the agreement reached with the IDC – further announcements regarding these matters ‘will be made as appropriate.’
The Newcastle works blast furnace will continue operating, ensuring customer needs are met during this period.
AMSA had previously listed the scrapping of the Preferential Pricing System, export tax, and tariff measures including safeguards as being imperative to save the company.
Level the playing field:
Verster said the Government will use the deferral period to address these concerns while AMSA will focus on implementing further improvements to optimise operations, enhance product offerings and supply chain reliability for customers, and advance its commitment to localisation through continued industry collaboration.
“It is understood that the Government will introduce a more market-related and less punitive Preferential Pricing System and export tax on scrap,” Verster said.
“These measures will help level the playing field in the steel industry to the benefit of the country. AMSA expresses appreciation to the Government, particularly Minister Parks Tau for his leadership during the engagement, as well as the Department of Trade, Industry and Competition, the IDC, and all stakeholders including customers, suppliers, and organised labour for their support in continuing this critical industrial capacity.”
Verster pointed to ‘encouraging signs of demand growth in the South African economy, with potential for the steel market due to recent opportunities in sectors such as energy.’
“Should this materialise, it will have a positive effect on the high-quality products manufactured and supplied by AMSA.
Emphasising that sustainable profitability remains the ultimate objective: “The next six months will be crucial in determining whether the Long Steel Business can achieve the financial stability required for long-term viability. We are dedicated to this process and appreciate the support of all our partners in this endeavor.”
Newcastle Growth Coalition responds:
Johan Pieters, Chairman of the Newcastle Growth Coalition, has expressed optimism regarding the future of ArcelorMittal South Africa’s (AMSA) Long Steel Business, following the recent announcement that the Newcastle plant’s future has been secured until August 31.
“We have remained optimistic about AMSA Newcastle for months, believing that AMSA and the national government would come together to protect the 3,500 jobs at risk due to the potential wind-down of the Long Steel Business,” Pieters said.
Since December 2023, the Newcastle Growth Coalition Chapter has been involved in the process.
“We thank Minister Parks Tau for his leadership during negotiations with AMSA and other government institutions. His efforts, alongside other ministers, have achieved this milestone deal.”
Newcastle’s community and businesses can now focus on the future, aiming to transform Newcastle into a model city.
“The Newcastle Growth Coalition reiterates: NEWCASTLE IS OPEN FOR BUSINESS. We have resources to support new manufacturing and small businesses.”
Located between Johannesburg and Durban, our city is central to South Africa’s major ports.
“Let’s Build Our City, Newcastle – Together.”
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