Eskom Faces Major Power Demand Drop as ArcelorMittal SA Considers Shutdown

South Africa’s power utility Eskom may soon face a significant drop in electricity demand if ArcelorMittal South Africa (Amsa), the country’s largest steel producer, follows through on plans to shut down its long-steel plants in Newcastle and Vereeniging.

While Eskom maintains that this potential closure will not have a major impact on the country’s electricity supply, energy expert Tshepo Kgadima has warned that the loss would be significant—comparable to losing an entire country’s worth of power consumption.

What’s at Stake for Eskom?

Amsa is a major industrial electricity consumer, and shutting down its two plants would slash demand by an estimated 400 megawatts—equivalent to Botswana’s entire power consumption.

Kgadima believes this loss of industrial demand is a warning sign for Eskom and the broader South African economy. “If industrial giants continue shutting down, Eskom could be in serious trouble,” he said.

While Eskom has long struggled with generating enough power to meet demand, the unexpected issue of demand reduction poses a different kind of risk. Less electricity consumption means lower revenue, which could impact Eskom’s ability to maintain infrastructure and fund future projects.

Why is Amsa Considering Closure?

Amsa’s potential shutdown stems from multiple economic pressures, including:

• High Electricity Prices: The rising cost of power has placed strain on energy-intensive industries.
• Global Steel Market Challenges: Amsa faces increasing competition from cheaper steel imports.
• Declining Local Demand: A sluggish economy has reduced demand for locally produced steel.
• Operational Costs: Maintaining aging infrastructure and meeting environmental regulations have increased costs.

If these challenges persist, the company may have no choice but to shut down, putting thousands of jobs at risk and dealing another blow to South Africa’s struggling manufacturing sector.

The Broader Economic Impact

Beyond Eskom, Amsa’s potential closure could have widespread economic consequences:

• Job Losses: Thousands of workers in Newcastle and Vereeniging could lose their jobs.
• Steel Industry Crisis: The local steel market would face further decline, leading to increased reliance on imports.
• Municipal Revenue Losses: Towns that depend on industrial electricity consumption for municipal income could see financial strain.

Eskom’s Response

Eskom has downplayed the potential impact, stating that while it values large industrial customers, its operations will remain stable regardless of Amsa’s decision.

However, energy experts argue that if more heavy industries shut down, Eskom’s financial model could be at risk. “A sudden reduction in demand could create a revenue shortfall, affecting maintenance and expansion plans,” Kgadima explained.

The fate of Amsa’s Newcastle and Vereeniging plants remains uncertain, but the possibility of their closure highlights deeper issues within South Africa’s industrial sector. As electricity costs rise and economic challenges persist, more industries may follow suit—posing long-term risks for Eskom, workers, and the broader economy.

Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram

For more News in Johannesburg, visit joburgetc.com