Business
Government Fails to Save ArcelorMittal South Africa: Thousands of Jobs Lost as Steel Business Closes
In a significant blow to South Africa’s industrial sector, ArcelorMittal South Africa (AMSA) has announced the closure of its Longs Steel business, despite extensive efforts by the government to find a solution. The decision, finalized in early 2025, will result in the loss of thousands of jobs and have far-reaching economic consequences.
A Year of Failed Negotiations
AMSA first announced its intention to wind down the Longs Steel business in 2024, citing severe financial losses and structural challenges. However, negotiations with stakeholders, including the government, delayed the decision. In February 2025, the company received an interest-free R380 million loan from the Industrial Development Corporation (IDC) to fulfill outstanding orders and continue discussions.
Despite these efforts, the parties were unable to reach a sustainable solution. AMSA cited four key unresolved issues:
- Scrap Advantage Over Iron Ore: The government failed to remove the scrap export tax, which disadvantages iron ore-based steel producers.
- Preferential Pricing System: The system favoring Electric Arc Furnaces remains in place, despite evidence of its damaging impact.
- Port and Rail Inefficiencies: Transnet refused to negotiate improved tariffs, exacerbating logistics costs.
- Energy Costs: AMSA’s application to reduce electricity prices was not supported by Eskom, and energy costs are set to increase by 12.74% from 1 April 2025.
The Final Blow
AMSA’s board and management expressed deep disappointment over the government’s inaction. “The structural elements leading to the wind-down of the Longs Steel Business remain unaddressed despite extensive discussions,” the company stated. “Since early 2024, when negotiations began, these conditions have not merely remained static but have worsened.”
The final shutdown of the blast furnaces will begin in the first week of March 2025, with the last steel produced by late March or early April. The business will enter care and maintenance in the second quarter of 2025.
Economic and Social Impact
The closure of AMSA’s Longs Steel business will have devastating consequences:
- 3,500 direct and indirect jobs will be lost.
- An estimated 80,000 to 100,000 additional jobs in related industries are at risk, as specialty steel produced by AMSA is essential for various sectors.
- The Newcastle community in KwaZulu-Natal, where AMSA operates a major plant, will be particularly hard-hit.
Private school group Curro also warned that the closures would negatively impact its schools in the region, highlighting the broader social implications of the shutdown.
A Bleak Future for South Africa’s Steel Industry
AMSA’s decision underscores the challenges facing South Africa’s steel industry, including high energy costs, inefficient logistics, and unfavorable policies. The lapse of provisional safeguards on Hot Rolled Coil (HRC) has further exposed the industry to import competition, threatening its viability.
“As difficult as these decisions are, it will allow the Flats Business to be better positioned to achieve sustainability,” AMSA said in a statement. However, the closure of the Longs Steel business raises questions about the future of steel production in South Africa and the government’s ability to support critical industries.
The failure to save AMSA’s Longs Steel business is a stark reminder of the challenges facing South Africa’s industrial sector. With thousands of jobs lost and communities like Newcastle facing economic devastation, the closure highlights the urgent need for policy reforms and government intervention to support key industries.
For now, the ripple effects of this decision will be felt across the economy, underscoring the importance of addressing structural issues to prevent further losses in the future.
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