ArcelorMittal forges ahead with steel plant closures despite government talk of a R1bn bailout

ArcelorMittal South Africa will shut down its steel-making operations in Newcastle and Vereeniging from Friday 31 January 2025, despite reports that the government is considering a R1-billion rescue package for the company.

Daily Maverick has seen a letter from ArcelorMittal dated 29 January, in which the company informs trade unions about the workers’ retrenchment process that will ensue as a result of the steel operations’ closures.

The retrenchment process is set to begin on 6 February. 

In the 10-page letter to trade unions, including the National Union of Metalworkers of South Africa and Solidarity, ArcelorMittal said it had no plans to reverse its shutdown decision, which would result in 3,500 direct and indirect job losses and affect communities in Newcastle, Vereeniging, and surrounding areas.

A source inside ArcelorMittal told Daily Maverick on Friday morning that the company’s position on the shutdown still stood.  

According to Business Times, government officials were considering a R1-billion rescue package for ArcelorMittal. This package would have pushed the company to reverse its decision and keep its steel operations going, saving jobs in the process.

Trade, Industry and Competition Minister Parks Tau and Finance Minister Enoch Godongwana have reportedly set up a team to draft a rescue package of up to R1-billion for ArcelorMittal. Business Times reported that state organs, including the Public Investment Corporation, the Industrial Development Corporation, and the Unemployment Insurance Fund, could be involved in raising the rescue package for ArcelorMittal. 

However, in the letter to trade unions, Mokhele Morabe, ArcelorMittal’s employee relations manager, said the company “has not yet received any formal commitments or proposals from the Department of Trade, Industry and Competition” on the mooted rescue package. 

“ArcelorMittal South Africa wishes to clarify that it has no information regarding a R1-billion bailout. This matter has not been discussed or raised with the company prior to this.

“The ArcelorMittal group would be open to exploring solutions proposed by the South African government relating to the ‘longs’ business and the company as a whole,” said Morabe. 

ArcelorMittal confirmed in early January 2025 that it will pull the plug on its long long-steel plant because it is loss-making and has become financially unsustainable. Long(s) refers to a range of steel products used in key sectors, such as rail, agriculture, and mining, and is critical in power transmission. 

Read more: How government dithering pushed ArcelorMittal to shut down steel operations

The wind-down will affect all long steel plants, including the Newcastle Works, Vereeniging Works, and the rail and structures subsidiary, Amras, which relies on intermediate products currently produced at Newcastle.

In the letter to trade unions, ArcelorMittal repeated that running the long-steel operations would not be financially sustainable without financial support or a bailout.

“ArcelorMittal South Africa cannot continue to financially support the longs business beyond the previously communicated timelines. Our balance sheet is under significant strain, and prolonged exposure would exacerbate this vulnerability,” said Morabe. 

When asked for comment on the matter, Yamkela Fanisi, spokesperson for Tau and the Department of Trade, Industry and Competition, told Daily Maverick on Friday that discussions at a government level with ArcelorMittal were “ongoing”.

“At an appropriate time we will give feedback,” said Fanisi. DM