The South African government is pressing ArcelorMittal South Africa (AMSA) to pursue the divestment of its long steel operations as part of a broader strategy to secure the company’s future, according to Minister of Trade, Industry, and Competition, Parks Tau. This initiative is supported by a R1.2 billion financial aid package designed to safeguard employment and bolster the nation’s steel sector.
The move follows protracted discussions between the government and AMSA, which had planned to cease its long steel operations in Newcastle and Vereeniging by April 2025 due to persistent financial losses.
The proposed closure jeopardised approximately 3,500 direct and indirect jobs, prompting swift government action. The Industrial Development Corporation (IDC) has been instrumental, providing R380 million in February 2025 and a further R1 billion working capital facility in June 2024 to maintain operations.
Minister Tau underscored the government’s commitment to facilitating the sale of parts of the long steel business. “We are collaborating with AMSA to gauge market interest and ensure the longevity of these vital operations,” Tau stated at a recent briefing. The government is also tackling systemic issues within the steel industry, including elevated energy costs, logistical bottlenecks, and competition from low-cost steel imports, particularly from China.
A dedicated technical working group, comprising representatives from the Presidency, the Department of Trade, Industry, and Competition, the Departments of Employment and Labour, Electricity and Energy, Transport, National Treasury, the IDC, the South African Revenue Service, Eskom, Transnet, and AMSA, has been formed to address these challenges.
The group is focused on reforming policies, such as scrap metal pricing and tariff frameworks, to enhance the competitiveness of local steel producers.
Furthermore, the financial support package includes R417 million allocated under the Temporary Employee/Employer Relief Scheme (TERS) to preserve nearly 3,000 jobs over the next 12 months. However, industry observers have expressed varied opinions on the sustainability of AMSA’s operations. The National Employers’ Association of South Africa (NEASA) has voiced concerns over the bailouts, with CEO Gerhard Papenfus arguing, “These measures merely postpone an inevitable closure, with the steel downstream and taxpayers bearing the burden.”
Conversely, the government remains hopeful about securing a market-led solution. The IDC, which holds a 6.4% stake in AMSA, is exploring options to increase its shareholding, with due diligence currently underway. Notably, a R19 billion leveraged bid from Networth Investments to acquire AMSA was rejected by the company’s majority shareholder, ArcelorMittal Holding AG, in November 2024, underscoring the difficulties in identifying a suitable buyer.
The steel industry remains a cornerstone of South Africa’s economy, underpinning infrastructure development and industries such as construction, mining, and automotive manufacturing.
With the emergency funding due to expire in four months, efforts to secure a sustainable future for AMSA’s long steel operations are intensifying.
As discussions progress, the resolution will likely shape the trajectory of South Africa’s steel industry and its role in the wider economy. The government’s proactive approach signals a broader commitment to recalibrating industrial policies to navigate global market challenges.
What are your thoughts on the above? Share your views in the comment section below.
One Response
The Demise of still giant steel plant. Acellor Mittal are the causes of the ANC government…They will find ways to destroy U so that they can eventually take possession and ownership. It is the way of a Marxist Socialist regime to destroy people, places and things.