The announcement by giant steel manufacturer ArcelorMittal South Africa (Amsa) has sparked fears of an economic, job and social catastrophe.
The Steel and Engineering Industries Federation of Southern Africa (Seifsa) said that ArcelorMittal’s intention to shut down its operations in Newcastle and Vereeniging, as well as the rail and structural subsidiary, ArcelorMittal Rail and Structural, will have a devastating impact on several fronts, surrounding communities, suppliers, contractors and the broader metals and engineering sector. Seifsa president Elias Monage said they had repeatedly warned of a socio-economic catastrophe should ArcelorMittal shut its plants.
Monage said that some of the most alarming estimates over and above the reported 3 500 direct jobs on the line were the medium-term impact of second-round effects in the order of 20 000 to 25 000 jobs and in the longer-term multiples of more than this.
“The effect of this latest development will reverberate throughout the economy and the continent, impacting the auto, motor, construction and mining sub-sectors of the economy and all who work in it. This development presents a major setback to the base of the industrial sector.”
However, the Department of Trade, Industry and Competition said in a statement that “during the course of 2024, Amsa had reached out to various government departments and state-owned entities with requests for different concessions for its business.”
The department said, having taken heed of these requests, Minister of Trade, Industry and Competition Parks Tau “took the decision to form a comprehensive and coordinated approach to resolving the issues raised by Amsa.”
“In doing so, minister Tau set up a technical working group made up of the relevant stakeholders, including the DTIC and Amsa, the departments of electricity and energy, and transport, as well as Eskom, Transnet and private sector stakeholders.
“This working group held regular engagements up until and well into December 2024. This work has been noted in the statement released by Amsa.”
“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,” the DTIC said.
“Whilst the immediate task will be on addressing structural issues affecting Amsa’s long-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 DTIC said.
Monage blasted the government, saying the goals set by the Steel Master Plan (SMP) to charter a roadmap to re-energise the sector, expand production, increase demand across the steel and fabrication industry value chain, and introduce an industrialisation programme have failed dismally.
“The SMP was meant to deliver a comprehensive industrial policy framework, where a total, inclusive, industry perspective would be taken and complementarities across the value chain enhanced.
“Sadly, what we are witnessing is the opposite, wherein policy is implemented in a fragmented manner, with a short-term view and with pockets of the industry being pitted against one another.
“ArcelorMittal’s year-long plea for help from the government has come to naught. Sadly, we’ve seen this play out before with the closure and mothballing of Highveld Steel and Saldanha, respectively, all at the feet of a dithering government too slow to react and offering too little too late,” he said.
Seifsa stated that when it comes to the economic spin-off created by the steel industry, the decision taken by Amsa will now have fewer players producing long-steel products such as fencing material, reinforcing bars, beams, rails and profiles that are used in the construction, mining and manufacturing sectors.
“A holistic approach that protects the diversity and sustainability of the entire steel value chain is essential for the future success of the South African steel industry,” said Monage.
