It is now confirmed: ArcelorMittal South Africa (AMSA) has formally announced the commencement of the final wind-down of its Longs Business in Newcastle, marking a pivotal moment for the nation’s steel industry.
On 6 February 2025, AMSA apprised shareholders and the South African populace that the implementation of the Longs Business wind-down, originally slated for late January 2025, had been deferred by roughly one month.
This postponement was strategically designed to accommodate two pressing objectives:
• The completion of an unexpectedly robust outstanding order book, with precedence afforded to automotive and seamless tube clientele.
• Sustained dialogue with the South African government concerning the Longs Business’s future, with a definitive statement expected in the latter half of February 2025.
The steel titan elucidated that, subsequent to this disclosure, it has engaged relentlessly with governmental bodies and key stakeholders to unearth viable pathways to circumvent the wind-down. “Regrettably, despite our best efforts, the parties involved have not been able to find timely solutions required to defer the wind down of the Longs Business,” AMSA lamented in an official statement.
Progress on several linchpin issues has proven frustratingly elusive:
· Scrap advantage over iron ore: The scrap export tax remains in place, and the Preferential Pricing System, for steel producers using Electric Arc Furnaces continues to unfairly advantage them, despite evidence from an independent Econometrix study on the damaging impact of the scrap Price Preference System and export tax.
· Port and rail efficiency: No further progress has been made on improving Port and Rail efficiency. Transnet has declined to negotiate improved tariffs.
· Reduction in energy prices: Our application for a negotiated pricing agreement with Eskom has not been supported, and no progress has been made in this regard.
· Implementing trade measures: Duties have not been implemented as anticipated and provisional safeguard on Hot Rolled Coil have lapsed.
“The structural elements leading to the wind down of the Longs Steel Business remain unaddressed despite extensive discussions. Since early 2024 when negotiations began, these conditions have not merely remained static but have worsened,” AMSA asserted with gravitas.
The company further illuminated the looming spectre of a 12.74% electricity tariff hike slated for 1 April 2025, which threatens to further erode ArcelorMittal South Africa’s competitive footing in an environment where energy costs are already exorbitant. Compounding this, AMSA noted Transnet’s proposed tariff escalations across its service spectrum, poised to inflate logistics expenses that already lag behind international norms. “On the regulatory front, the crucial safeguards on Hot Rolled Coil have lapsed, leaving the industry perilously exposed to heightened import competition without sufficient defences,” the steel conglomerate warned.
Furthermore, AMSA emphasised that despite its persistent submission of rigorous evidence delineating the deleterious impacts of extant policies, no substantive correspondence has been forthcoming from the Department of Trade, Industry, and Competition (DTIC) or National Treasury regarding the abolition of the export tax or a re-evaluation of the Price Preference System. “This continued policy inertia, coupled with a worsening cost framework, has precipitously accelerated the decline in operating conditions beyond our initial projections from earlier this year,” the company averred.
Confronted with these intractable realities, AMSA has declared that its Board and Management are left with no recourse but to enact the final wind-down of the Longs Business.
The decommissioning of the blast furnace is scheduled to initiate in the first week of March 2025, with the final steel output from the Longs Business anticipated by late March or early April 2025. The full transition to care and maintenance is projected to conclude in the second quarter of 2025.
““The Company is deeply disappointed that all our efforts over the last year have not translated into a sustainable solution, resulting in a significant negative impact on the economy, the loss of approximately 3,500 direct and indirect jobs, and a detrimental impact on the local community in Newcastle,” reflected Kobus Verster, ArcelorMittal South Africa CEO, in a sombre conclusion.
As ArcelorMittal South Africa embarks on this decisive phase of shuttering its Longs Business in Newcastle, what are your insights on this watershed development? We invite you to articulate your perspectives in the comment section below.
6 Responses
SA meaning the government must use their brain and look after the people of SA..To import steel from China and let your own country go down the drain is just ridiculous..Sorry to say but Ramaphosa should be lifted out of his position because SA is going to be the next Zimbabwe. We can’t allow fools to run the country. .
This is really sad…. They kept the workers in suspense thinking they were gna remain open. But it’s now come down to this. It’s really unfair to our ppl.
This RNU regime has no intention or understanding of business and the economy.
The absolute lack of willingness to retain jobs is shocking.
Additional tax could be collected by introducing tariffs on imports which Is off set by PAYE by 100 000 taxpayers.
It seems the state wants to destroy any businesses that do provide jobs.
Voters will soon be beggars whilst the state can easily prevent theft.
Anc rather give electricity to Mozambique, Zimbabwe Namibian Swaziland and Lesotho than to keep business going in oor own country.
These states don’t pay mostly and get electricity at lower prices than Saffers
Why not reduce electricity and rail tariffs?
Hyenas at the trough don’t care for population suffering in poverty.
Shocking to say the least! SA steel industry was strong, now crippled.
Unfortunately this goverment of the last 30 years is the result of the decline of the economy. Our goverment in South Africa is their for their own wealth and not for the citizens of this country. Unemployment in this country will stay high until the citizens of each province decide to vote against this goverment and make goverment accountable for their decisions Our last chance is in 2026 local goverment elections
It is very sad that the company has finally took a decision to shutdown LONG BUSINESS in Newcastle.
We know that many families in Newcastle area even the people from other surounding areas were being helped by AMSA for a long time just to put the bread on the table in order for them to survive but now on it will be very deficult for them to survive.
In other way AMSA has played a very crucial role in Newcastle to uplift the economy of that area ,we wish that there is other way of finding the solution of not shutting down the company but the goverment has failed us as Newcastilians.
It’s hard to accept but we TRUST GOD the CREATOR OF UNIVERSE He wil pave the way for us …
Thanks