AMSA CEO Kobus Verster Reveals Details Behind R1.6 Billion Rescue of Newcastle Works

Many South Africans breathed a sigh of relief on Monday, 31 March 2025, after ArcelorMittal South Africa (AMSA) issued a statement confirming the postponement of its Long Steel Business wind-down. The deferral, effective for an initial six months until 31 August 2025, offers a reprieve for the struggling operation.

As you will recall, Newcastillian News reported that AMSA secured a government loan exceeding R1.6 billion from the Industrial Development Corporation of South Africa SOC Limited (IDC) to facilitate this decision.

“The facility is repayable subject to agreement between the parties and contingent on the financial performance, solvency and liquidity of the Long Steel Business,” AMSA stated in its release.

The company also confirmed that the consultation process under Section 189(3) of the Labour Relations Act would be paused. However, restructuring may proceed in areas outside the Long Steel Business to address operational needs. The Newcastle Works blast furnace will continue running to meet customer demands during this period.

AMSA also noted that the South African Government intends to use this window to address structural challenges in the steel industry, including the scrap Preferential Pricing System, scrap export tax, and tariff measures like safeguards.

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However, despite this respite, the question now stands, where to from here?

This was reflected during a media briefing with AMSA’s Chief Executive Officer, Kobus Verster, on Tuesday, 1 April 2025.

When asked if the IDC sought a larger equity stake in exchange for the loan, Verster clarified that no equity conversion was tied to the funding. “It is a pure loan, with its terms on that. The IDC has indicated that they have a desire to look an increase shareholding, and for that a period has been agreed upon, and it is for them to actually look under the bonnet to see whether they want to increase and at what value,” Verster stated.

Moreover, he explained that AMSA had long maintained it could not sustain losses in the Long Steel Business. Verster emphasised that the IDC funding provides temporary relief, allowing time for lasting solutions, with repayment tied to the business’s future profitability.

Verster also highlighted a growing recognition of the Long Steel Business’s importance to South Africa’s industrialisation and economy.

Its closure would have long-term consequences, he noted, dismissing scrap steel as a viable substitute for steel production.

On customer relations—amid repeated delays and the risk of losing business—Verster said AMSA had stockpiled materials for quality-sensitive sectors like automotive, sufficient for 6 to 12 months, to ease transitions. He further emphasised that most clients preferred AMSA’s certified Newcastle Works products, processed through a local accredited supply chain, and the company prioritised transparency with them.

Regarding the halted retrenchment process, Verster suggested the government saw greater value in preserving jobs than funding unemployment programs like the Unemployment Insurance Fund. “So, the best way is to actually support companies, be sustainable, be profitable and contribute to job creation directly.”

As AMSA prepares to strengthen its position over the next six months, Verster outlined the wind-down process that was narrowly avoided at Newcastle Works.

“Typically, a month before, you will stop the furnace by boring a hole in the bottom of the furnace and allow the liquid to go out. Now, for the liquid to go out, you must change the substance in the furnace. So, you will have less iron ore, and you will have more coke and coal. This means, you will have a high energy, very liquid substance that can easily flow out.” Adding to this he noted, the month-long process to safely shut down the furnace.

He added that upstream material supplies must cease beforehand to empty the furnace. “We were days away from that point. We had no materials left and were days away from boring the hole, and typically we had to reintroduce material, where we couldn’t do it fast enough and allocated it from Vanderbijlpark to there (Newcastle), and we are now once again relatively safe,” Verster said.

With AMSA now partnering with the government to secure the Long Steel Business, what are your thoughts? Share your views in the comment section below.