AMSA Memo Confirms Closure, Newcastle Employees Say, “I Cannot Afford to Lose My Job”

A dark cloud hangs over Newcastle as ArcelorMittal South Africa (AMSA) informed its staff that it would begin preparatory steps to wind down its Longs Steel business from Monday, 1 September 2025.

This development follows an internal memo circulated by AMSA’s CEO, Kobus Verster, on Friday, 29 August 2025.

In the memo, Verster explained that while the company had been transparent about the difficulties faced, the challenges have persisted despite extensive efforts. He noted that management had explored every possible option, including strategic partnerships, funding avenues, operational improvements, and direct engagement with government, all with the aim of keeping the Longs Business viable.

According to the memo, this temporary reprieve was used to stabilise operations, tackle structural challenges, and pursue a sustainable path for the business. However, Verster stressed that the continuation of the Longs Business depended heavily on further financial support and policy interventions. Without such measures, AMSA would not be able to assume additional financial risk.

In the memo, Verster acknowledged the efforts of multiple parties, stating, “Unfortunately, despite the hard work put in by management, the IDC, government and other stakeholders, we have not yet been able to find a positive way forward. Although there has been support from the government and some positive steps have been taken, the long-standing structural problems remain largely unresolved: rising imports, limited tariff protection, very high electricity costs, and the worsening performance of the rail system. At the same time, weak demand in the local market continues to put additional pressure on the business.”

Verster further warned that unless a solution could be found before the end of September, the company would be forced to take operational steps towards an orderly closure of the Longs Business shortly after 30 September 2025.

He confirmed that efforts to secure sufficient funding to operate beyond this deadline had been unsuccessful.

“In this light we must now, I regret to say, take further preparatory steps towards the closure of the Longs Business. This is not a decision that anyone wishes to make, but it is a reality that we must responsibly prepare for. We will accordingly be issuing section 189 notices to affected employees in the Longs Business on a staggered basis as facilities wind down, commencing on 1 September 2025,” Verster wrote.

Following the circulation of the memo, an AMSA employee described the atmosphere, saying, “We all knew the situation was bad, but the memo came a bit as a shock on Friday. We were told that the management team would meet with us today (Monday, 1 September 2025) to explain the entire process and what is actually going to happen. The thing is, this has been a nightmare for all of us. I am the breadwinner of my home, and cannot afford to lose my job, especially as I still have a child in school.”

Wishing to remain anonymous, the employee added, “While we were instructed not to discuss the matter with the media, the situation has been a source of immense stress and strain. My wife and I have been checking tirelessly to see how we could cut costs at home since we first received the news that the company might be shutting down its longs steel business in Newcastle, saving wherever we could. But just looking at my family, I have no idea how I am going to sort out my monthly expenses, ensure my child and wife are cared for, and still find another source of employment. I will most likely need to look out of town for work if the meeting does not go well.”

Another long-serving employee expressed similar fears, saying, “This year has been terrible for my family and myself, because while my children are fortunately all out of school and are working, my wife and I have no idea what we are going to do. While my wife does work, I am the main breadwinner of the house, and once myself and the others are out of work, my wife’s salary will not be able to carry us for the foreseeable future, and like many other artisans from AMSA, I will most likely have to leave town to find some other employment, which will be difficult for me, as I am already in my 50s.” Furthermore, the AMSA employee confirmed that a meeting would be taking place on Monday, adding, “Just like everyone else, I am waiting for a last minute miracle, but I am afraid that there is not much hope left for the company and I feel terrible, especially as I have worked for the company for virtually my entire adult life and everyone is just so demotivated.”

While the steel giant’s employees are now preparing for an uncertain future, waiting for the outcome of the meeting to be held on Monday, 1 September 2025, it should be noted that the National Energy Regulator of South Africa (NERSA), at its meeting on Thursday, 28 August 2025, approved AMSA’s application for relief on the price it pays Eskom for electricity at both its Newcastle and Vanderbijlpark plants.

This came after Eskom initially rejected the application, arguing that the steelmaker did not qualify for discounted tariffs under the existing framework. AMSA then petitioned NERSA to reconsider the matter, prompting the regulator to embark on a consultation process, which ultimately culminated in the approval.

The approval was not without controversy. Competitors of AMSA, who have long accused the company of predatory pricing, approached the Competition Tribunal in an attempt to interdict AMSA from charging below-market prices to undermine rivals. Their challenge followed AMSA’s receipt of a R1.7 billion bailout from the state-owned Industrial Development Corporation (IDC), a lifeline that itself had drawn scrutiny.

Despite AMSA noting that te electricity tariffs formed part of its challenges, Eskom, for its part, cautioned that granting AMSA this relief could set a precedent for at least 130 other large electricity users who do not currently meet the criteria for such discounts. According to Eskom, if similar concessions were extended more broadly, the resulting revenue shortfall could force a tariff increase of up to 25% for ordinary consumers.

Despite these concerns, the Department of Trade, Industry and Competition supported AMSA’s application, as confirmed in a discussion document NERSA had previously published on the matter. With this backing, NERSA’s decision gives AMSA access to discounted electricity, a critical factor considering its high input costs, even as questions linger over the wider economic and competitive implications.

Newcastillian News has reached out AMSA for comment on the matter, but none was forthcoming at the time of publication.

As Newcastle now braces for an uncertain future, a public notice is being shared on local community WhatsApp groups calling for residents to participate in a prayer night for ArcelorMittal South Africa, which is said to be taking place at Deo Victoria Church, 135 Drakensberg Drive, from 6 pm on Monday night.

The future of ArcelorMittal South Africa’s operations carries deep significance for the people of Newcastle and Vanderbijlpark, where generations of families have relied on the steelworks for employment and community stability. For many residents, the company is more than just an industrial giant — it is the backbone of their towns, supporting livelihoods, small businesses, and local development.

Any shift in its fortunes inevitably stirs both hope and unease, as the wellbeing of thousands is intertwined with the continued presence and resilience of the steel industry in these areas.

What are your thoughts on the above? Share your views in the comment section below.

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