ArcelorMittal South Africa (AMSA) has disclosed that scant progress has been made in tackling the formidable structural barriers jeopardising its beleaguered long steel business, thereby escalating the likelihood of commencing closure preparations before 30 September 2025.
The company’s long steel operations, primarily situated in Newcastle, KwaZulu-Natal, alongside facilities in Vereeniging and Mpumalanga, are contending with significant challenges.
These include exorbitant energy and logistics expenses, a deluge of low-cost steel imports—chiefly from China—and insufficient government backing. Consequently, these issues have severely undermined the sustainability of the division, which supports approximately 3,500 direct and indirect jobs across three provinces.
As reported by Newcastillian News, AMSA initially announced its intention to wind down its long steel operations in January 2025, citing unsustainable financial losses and an uncompetitive cost structure.
However, this decision was temporarily deferred following a R1.683 billion loan from the Industrial Development Corporation (IDC) in March 2025, designed to sustain operations for an additional six months. The funding was intended to afford AMSA and the government a critical window to negotiate a viable strategy to preserve the long steel division and safeguard employment.
Furthermore, in a voluntary trading statement issued on the Stock Exchange News Service (Sens) on Monday, AMSA voiced deep concern over the lack of progress in resolving the “structural impediments” threatening the division’s viability.
Specifically, the company highlighted several entrenched issues eroding the competitiveness of its long steel business. These include the unprecedented underperformance of state-owned logistics provider Transnet, which has disrupted supply chains, and a surge in low-cost steel imports, particularly from China.
Moreover, escalating energy costs and inadequate government intervention have further exacerbated the situation, resulting in sustained financial losses that render continued operations increasingly untenable.
Nevertheless, AMSA reported a modestly improved financial performance for the six months ending 30 June 2025, posting a headline loss of 3 cents per share, compared to a 6-cent loss per share in the corresponding period the previous year. This improvement was driven by enhanced operational efficiencies and prudent cost management within its flat steel business. Yet, the long steel segment remains a pressing concern, with no clear pathway to profitability.
The potential closure of the long steel operations could deliver a devastating blow to local economies, particularly in Newcastle, where Amsa’s facility serves as a cornerstone of economic activity, accounting for 34% (over R10 billion) of the company’s procurement spending in 2023.
AMSA has indicated that, without additional financial support or a resolution to these structural challenges, it will proceed with shuttering its long steel operations by 30 September 2025. The company remains engaged with stakeholders, including the government, to explore all feasible avenues to avert this outcome, though the prognosis remains uncertain.
Notably, during his 2025/2026 Budget Speech, the Minister of the Department of Trade, Industry, and Competition (the dtic), Parks Tau, acknowledged the formidable economic headwinds confronting the nation. He cited energy insecurity, logistics constraints, premature de-industrialisation, and global volatility as critical factors that have collectively curtailed exports, slowed growth, and deepened uncertainty. These challenges were evidenced by last year’s sluggish 0.6% GDP growth, a near-stalled first quarter of 2025, a 2.8% decline in exports, and a profound 32.9% unemployment rate.
As Tau explained, since the inception of the 7th Administration, the government has been in “firefighting mode,” with a central focus on “Saving Arcelor Mittal South Africa (AMSA) to protect long steel and Newcastle,” alongside bolstering the ferrochrome sector and navigating strained incentives in the film and Global Business Services sectors. Budget Vote 39, he asserted, signals “a pivot, from crisis management to enabling growth, from emergency fixes to collective action.” He added that “At its heart lies the simple conviction that when Government, business, labour and communities co-create solutions, we unlock exponential impact.”
The looming spectre of closure for AMSA’s long steel operations underscores the urgent need for collaborative, innovative solutions to address South Africa’s broader economic challenges.
Minister Tau’s commitment to transitioning from crisis management to fostering sustainable growth offers a beacon of hope. Nevertheless, the persistent barriers of high energy costs, logistical inefficiencies, and unrelenting import competition cast a formidable shadow over the future of the long steel division and the livelihoods it sustains.
For communities like Newcastle, where AMSA’s operations are a vital economic lifeline, the stakes are profoundly high. The coming weeks will prove pivotal as stakeholders strive to forge a sustainable path forward. AMSA’s ongoing dialogue with the government and other partners must yield bold, actionable strategies to enhance competitiveness and preserve jobs. Failure to do so risks not only the closure of a critical industrial operation but also a further erosion of South Africa’s industrial base, deepening economic hardship for regions already grappling with uncertainty.
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One Response
This is devastating for our dear newcastle but as true south Africans we will bounce back it will take time advise to all those dependent on mital plan for this get your life in order start looking for another job my prayers are with you all