The financial losses suffered by ArcelorMittal SA (Amsa) are proof that the government needs to move fast to intervene and help turn the fortunes of sub-Saharan Africa’s largest steel producer.
This was said by an independent economist after the previously state-owned company’s financial results for 2025 revealed a headline loss of R3.4-billion. In 2024, Amsa incurred R5.1-billion in losses, a massive hit from losses of R1.9-billion in 2023, while the headline earnings had last shown a positive growth of R2.6-billion in 2022.
The lacklustre results came in a week where Amsa had suffered a blow when the International Trade Administration Commission of SA (Itac), which administers import and export tariffs, delivered a preliminary decision not to impose provisional safeguard duties on imports of corrosion-resistant steel coil, which is utilised in downstream sectors such as construction, appliance manufacturing as well as automotive and engineering sectors.
Had the safeguard tariff been imposed, it would have made it more expensive to import the steel product, giving Amsa a competitive advantage.
The decision was a result of an Itac probe stemming from an Amsa application after the company raised concerns that it was experiencing “serious injury in the form of a decline in net profit, market share, price suppression, price depression and negative cash flow”.
However, Itac found that Amsa sales, output and employment, among other things, showed there are no critical circumstances warranting immediate action to prevent damage that would be difficult to repair.
During the results presentation on Thursday, Amsa CEO Kobus Verster touched on some of the major bottlenecks, including high electricity prices, cheap imported steel, and weak demand in the automotive, construction and mining industries.
Verster further revealed a wish list to strengthen its balance sheet, stating that 60% (730 000 tonnes) of imported flat steel could be produced in South Africa. In addition, Verster noted that they were working with Eskom on the implementation of the special tariffs, adding that a recent announcement involving the state-owned Industrial Development Corporation (IDC) was in the works and they have signed a non-binding term sheet.
“Discussions with the Industrial Development Corporation are progressing well. If successful, it will reshape the company’s outlook for 2026 and beyond,” said Verster.
A few years ago, the IDC reportedly made an offer to buy Amsa for about R8.5-billion, however, the parent company rejected the bid. Economist Mandla Maleka delved into Amsa’s constraints, pointing out cheap steel from China will continue flooding the domestic market, giving Amsa a run for its money until the South African government comes up with a long-term interventions. “IDC’s proposal on buying Amsa is welcomed in all respects. However, a few necessities are needed to guarantee lasting turnaround of Amsa. In the last financial reporting period, Amsa posted losses in excess of R2-billion. It is not a viable company because of he massive dumping of cheap steel from China.
“First necessity is for Eskom and National Energy Regulator of SA to agree to an economically viable electricity pricing structure. Amsa is electricity intensive due to smelting and most of its losses emanate from ‘unaffordable’ electricity prices.
“Second necessity is to secure long-dated almost fixed contracts with Amsa’s favourable customers – the domestic automotive sector, mining industry, construction industry and [Transnet and Eskom].
“Once these are concluded and signed, they’ll sustain Amsa for a longer period and also be able to compete with Chinese cheap and dumped steel imports. Short-dated contracts are not worth it when it comes to saving jobs and preserving the integrity of Amsa,” said Maleka.
“Amsa would be able to reverse the losses that they are currently suffering. There is also a possibility that the company could meet their objectives of between 60% to 62% of total exports.
He advocated for import tariffs to protect domestic steel producers. “South Africa needs to protect its most vulnerable products, including production of automotive products, and steel and chrome prices from cheap imports from Asian countries.”
Maleka also questioned whether the R1-trillion medium-term infrastructure budget announced by the Finance Minister Enoch Godongwana in the 2025/2026 national budget speech was being spent to benefit the construction industry value chain, which Amsa is part of.
Verster, delivering the company’s outlook, said they were looking forward to the government’s undertakings to support the steel industry, encompassing localisation, fair steel trade tariffs, and tightening controls on illegal trade activities and tariff violations.
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