NEASA Warns: AMSA’s Six-Month Delay Masks Bigger Collapse

South Africans welcomed the news regarding ArcelorMittal South Africa (AMSA) announcing a six-month postponement of its Long Steel Business wind-down, extending operations until 31 August 2025.

However, the National Employers’ Association of South Africa (NEASA) warned that government efforts to prop up the steel giant could harm the broader industry.

Gerhard Papenfus, NEASA’s Chief Executive, stated, “The South African government, by virtue of the International Trade and Administration Commission of South Africa (ITAC), in an attempt to rescue the failing steel monopoly AMSA, is engaged in a systematic process of orchestrating the demise of the entire steel industry.”

Papenfus outlined specific duties driving his concerns:

·         A 10% ad valorem duty applies to certain structural steel, paired with a 53% anti-dumping duty on Chinese imports.

·         A 10% ad valorem duty applies to flat steel, with a 13% safeguard duty under review.

·         For galvanised steel, a 10% ad valorem duty is in place, with a 60% safeguard duty and a 53% anti-dumping duty under consideration.

“As if this is not enough, ITAC recently notified the steel industry that they are considering the most sweeping review of duties covering the entire industry. This review will cover 609 tariff codes and will even go as far as considering introducing of what amounts to an import ban, unless a potential importer can obtain a permit, which will be subject to the sole discretion of government, who will probably consult AMSA in deciding whether or not such permit will be issued,” Papenfus explained.

He argued that protectionist duties, enacted since Lakshmi Mittal’s 2015 meeting with Jacob Zuma, have failed to revive AMSA. “AMSA is still struggling, even more now than 10 years prior, notwithstanding all the duties and billions in aid. All that has changed is the size of the steel industry; it is now substantially reduced, an industry in constant decline, suffocated by the duties. All that has increased is the quantum of both the duties and the financial aid to AMSA,” Papenfus noted.

Moreover, he emphasised that these measures only delay an inevitable collapse. “AMSA cannot survive without aid. But not only aid, it will have to be increasing aid, and that while South Africa’s economy is in decline, our money coffers are depleted,” he asserted.

Additionally, Papenfus critiqued the government’s persistence with duties despite evidence of their ineffectiveness. “This will prove to be a fatal approach, but apparently the only solution that this socialist government can come up with, simply because they do not understand, nor trust market powers,” he said, warning steel users—effectively all South Africans—to prepare for AMSA’s potential demise.

In contrast, Solidarity, the trade union, endorsed AMSA’s decision to delay closing its long steel plants in Newcastle, Vereeniging, and elsewhere, viewing it as a step to preserve jobs temporarily.

Willie Venter, Solidarity’s Deputy General Secretary for the metal and engineering sector, acknowledged the relief but stressed its limitations. “Of course, we are most grateful that such an intervention happened, even though it required tremendous pressure from trade unions in particular for these steps to materialise. We are very grateful that our members and the employees affected by the planned closure and retrenchments will now have temporary job security,” Venter said.

Solidarity underscored that the six-month deferral demands urgent action for lasting solutions.

“In the time to come the government and AMSA will have to engage in serious discussions to see if they cannot address some of the major problems such as those related to electricity supply and transport costs.” He added, “We call on both parties to use this period to find sustainable solutions to the structural problems plaguing the industry. Simply using even more taxpayer money is not the answer,” Venter urged.

Challenges afflicting the industry—high electricity costs, rail freight rates, cheap steel imports, and scrap metal export restrictions—extend beyond AMSA to the entire steel and engineering sector. Venter called for inclusive dialogue. “A golden mean between primary metal producers, smaller producers and downstream manufacturers will have to be found. Solidarity remains committed to protecting the interests of its members and will continue to be actively involved in the process to find sustainable solutions to the challenges facing the steel industry,” Solidarity concluded.

Notably, AMSA’s deferral relies on a R1.6 billion loan from the Industrial Development Corporation of South Africa SOC Limited (IDC).

With this in mind, AMSA noted that repayment depends on mutual agreement and the Long Steel Business’s financial performance, solvency, and liquidity. Under this arrangement, AMSA commits to maintaining operations and employment during the deferral, bolstered by a Temporary Employee Relief Scheme (TERS) grant to offset staff costs and reduce IDC dependency.

However, AMSA indicated that restructuring might proceed in areas outside the Long Steel Business for operational reasons. The Newcastle blast furnace will remain active to meet customer demand throughout this period.

Moreover, AMSA highlighted the government’s intent to address structural steel industry issues—such as the scrap Preferential Pricing System, scrap export tax, and tariff measures like safeguards—during the deferral. During this time, ArcelorMittal South Africa said it would also 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.

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With NEASA raising significant concerns about the rescue plan and Solidarity pressing for deeper solutions, what are your views on this development? Share your thoughts in the comment section below.