AMSA Sees Early Recovery Signs as Newcastle Works Deal Advances

ArcelorMittal South Africa (AMSA) says early signs of recovery are beginning to emerge after 18 months of restructuring, while negotiations that could determine the future of Newcastle Works have reached an advanced stage.

Releasing its results for the six months ended 30 June 2026, the steelmaker reported measurable improvements in its underlying performance despite continued financial losses, weak domestic demand and sustained pressure from imported steel.

Speaking during a media briefing on Thursday, 30 July 2026, AMSA Chief Executive Officer Kobus Verster said the company had undergone significant changes to improve its long-term sustainability.

“Although market conditions remain exceptionally difficult, the business we have today is significantly stronger than it was 18 months ago. The difficult decisions we have taken are beginning to deliver measurable improvements in our underlying performance. Our priority remains completing the turnaround, restoring sustainable profitability and positioning ArcelorMittal South Africa for long-term success,” said Verster.

Central to the restructuring was the decision to place AMSA’s Longs business, including Newcastle Works, into care and maintenance.

According to Verster, the move, together with procurement savings, improved maintenance, fixed-cost reductions, reliability gains and operational simplification, has helped stabilise the broader business.

“The underlying performance of the business continued to improve. Quarterly EBITDA (earnings before interest, taxes, depreciation, and amortisation) performance strengthened significantly from a loss of R1.1 billion in the third quarter of 2025 to near break-even levels in the second quarter of 2026, reflecting the benefits of the turnaround initiatives already implemented,” he noted.

Despite this progress, AMSA’s financial position remains under strain.

The company recorded an EBITDA loss of R409 million during the six-month period, while its headline loss widened from R1 billion a year earlier to R1.49 billion.

Free cash outflow reached R1.2 billion, largely because of elevated inventory levels, the wind-down of Longs operations and the closure of a legacy supplier-financing facility.

Net borrowings consequently increased to R7.9 billion.

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Apparent steel consumption in South Africa rose by 2% to approximately 1.3 million tonnes. However, imports accounted for 47% of domestic demand, continuing to restrict opportunities for local steel producers.

“Total steel sales volumes declined by 28% to 758 000 tonnes following the closure of Newcastle Works, while flat steel sales volumes increased by 3% to 684 000 tonnes, demonstrating resilience in core customer markets,” said Verster.

Revenue declined by 30% during the period, although the decrease was limited to 1.4% on a comparable basis. Crude steel production fell by 35% from 1.28 million tonnes in the first half of 2025 to 837 000 tonnes.

Excluding Newcastle Works, production declined by 5%, from 878 000 tonnes to 837 000 tonnes.

AMSA maintains that exiting the loss-making Long steel segment, together with structural cost reductions across the company, is supporting a gradual recovery in underlying earnings.

However, the steelmaker said further improvement would depend partly on the implementation of outstanding trade-protection measures and electricity tariff relief.

The renewal of AMSA’s Borrowing Base Facility, which supports its working-capital requirements, is also under way and is expected to strengthen the company’s balance sheet over time.

Globally, Verster said the continued imbalance between steel supply and demand was placing pressure on the industry.

“Excess global steelmaking capacity, elevated exports and continued oversupply from China and other Asian countries placed pressure on prices, margins and trade flows, prompting multiple governments around the world to substantially strengthen trade barriers and trade protection measures in response to unfair trade and import diversion,” he said.

Carbon-border measures are also reshaping international trade, with the European Union introducing costs linked to embedded emissions and the United States tightening its trade regime.

Locally, AMSA said imports, particularly from developing countries in the Far East, and the continued circumvention of existing controls were placing domestic producers under pressure.

The company identified several areas requiring intervention, including closing safeguard loopholes, strengthening import controls through the International Trade Administration Commission of South Africa’s Steel Review, and advancing anti-dumping and export-tax measures.

According to Verster, there are signs that the policy environment is becoming more supportive, with progress recorded across several government-led initiatives and continued backing from the wider ArcelorMittal Group.

As negotiations over AMSA’s future continue, attention is increasingly shifting towards alternative uses for assets placed under care and maintenance.

Several parties have reportedly expressed interest in joint-development opportunities.

“Data centres, pig iron production and export, direct reduced iron production and export, inland port and industrial hub development, renewable energy projects and localisation of mainline rail, are but a few positive options,” said Verster.

However, he stressed that progress on these opportunities remained dependent on clarity regarding the potential transaction involving the Industrial Development Corporation (IDC).

Discussions between AMSA, the ArcelorMittal Group and the IDC are continuing and have reached an advanced stage after earlier delays.

“The discussions remain subject to the conclusion of definitive agreements and receipt of various approvals. Further announcements will be made in relation to these matters as and when appropriate,” Verster explained.

No definitive agreement has yet been announced, meaning the future ownership, operation or repurposing of Newcastle Works remains unresolved.

In the meantime, AMSA is working to develop alternative revenue streams from the Newcastle property to help cover the site’s care and maintenance expenses.

“Lessons learnt at Pretoria- and Saldanha Works will see efforts continuing in Newcastle to develop alternative revenue sources to ensure that at minimum, care and maintenance costs are covered. The Company is positioned to support domestic demand growth and import substitution through competitive, reliable and high-quality local supply to domestic customers in support of market share retention, import replacement and downstream industrial development,” added Verster.

Flat Steel Business Remains Central to Turnaround

For now, AMSA’s operational priority remains restoring its Flat steel business to sustainable profitability through improved execution, productivity gains, automation and AI-driven efficiencies.

Capacity utilisation across the Flat steel operations declined from 69% to 66% during the reporting period.

The company nevertheless reported improved operational stability after resolving problems at Blast Furnace C. The instability began during the fourth quarter of 2025 and continued into the first quarter of 2026 before stable production was restored during the second quarter.

AMSA is working with suppliers to prevent a recurrence of iron ore quality problems, while a planned refurbishment of the furnace is scheduled for the fourth quarter of 2026, subject to market conditions.

Should inventory levels remain elevated, Verster indicated that operational stoppages could be extended to manage working capital and protect liquidity.

Across its operations, the company is concentrating on plant reliability, refurbishment and product quality, supported by collaboration with the wider ArcelorMittal Group. Priority areas include the steelmaking plant, plate mill, hot strip mill and AMRAS, with particular attention being given to throughput, efficiency and cost control.

AMSA cautioned that rising conversion costs remain a risk.

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Further efficiencies are being pursued through the company’s Value Plan and Continuous Improvement programme, particularly in energy and logistics. Selected cold-rolling and galvanising capacity has also been temporarily suspended until market conditions improve.

Despite disruptions caused by shipping constraints and local protest action, Verster said logistics resilience had improved through alternative routing, closer management of transporters and increased use of rail and intermodal solutions.

AMSA expects the second half of 2026 to remain challenging. However, it believes infrastructure investment, stronger trade protection, policy support and continued operational improvements could begin supporting the South African steel sector during 2027.

For Newcastle Works, the immediate focus remains on covering care and maintenance costs and identifying viable alternative uses for the site while the IDC discussions proceed.

Further clarity will depend on the conclusion of definitive agreements and the required approvals.

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