South Africa’s Steel Industry on the Brink: Government Races to Prevent Collapse

The South African government is stepping in to avert the collapse of the steel industry, engaging in crucial negotiations with ArcelorMittal South Africa (Amsa) to sustain its longs steel business.

Amsa had previously announced the closure of its longs steel manufacturing plants in Vereeniging and Newcastle by April 2025, citing severe financial pressures. However, on Thursday, the company confirmed ongoing discussions with the government and financiers to secure funding and delay the shutdown.

The High Stakes of a Steel Industry Shutdown

The potential closure of Amsa’s longs steel plants would have a devastating impact, not just on the company’s 3,000 employees but also on thousands of jobs in the steel supply chain. The South African economy has already been losing jobs in key sectors such as mining and manufacturing, largely due to inefficiencies in freight rail and port operations.

Several factors have contributed to the steel sector’s financial distress, including:

• Cheap steel imports flooding the market

• An influx of low-cost scrap metal affecting local prices

• Logistical bottlenecks due to inefficiencies in Transnet’s operations

Government Intervention: A Lifeline for Amsa

In an effort to stabilize the steel industry, the government, through the Industrial Development Corporation (IDC), has provided significant financial assistance to Amsa. This includes:

• R380 million in funding last month

• R1 billion working capital facility provided in June 2024

• R417 million approved under the Temporary Employer/Employee Relief Scheme (TERS) to support 2,982 workers for 12 months

Amsa has also been required to participate in Productivity SA’s turnaround and recovery programme as a condition of the financial support.

Industry-Wide Structural Reforms Underway

Beyond financial aid, the government is pursuing long-term industry reforms. The International Trade Administration Commission (ITAC) has launched a review of the steel industry’s tariff structure, including:

• Revising import tariffs to curb the influx of cheap steel

• Investigating an import surveillance system to monitor foreign steel prices

• Assessing the removal of rebates on some steel products

The objective is to protect local manufacturers from unfair competition while ensuring the long-term sustainability of the industry.

The Bigger Picture: Can South Africa’s Steel Industry Recover?

Despite government intervention, industry experts warn that without deeper structural reforms, the steel sector will remain vulnerable. Challenges such as slow economic growth, energy crises, and failing logistics infrastructure continue to weigh heavily on the industry.

While the government’s efforts provide temporary relief, a lasting solution will require policy certainty, infrastructure investments, and a clear industrial growth strategy.

With time running out, all eyes are on the negotiations between Amsa and the government—will these efforts be enough to save South Africa’s steel industry from collapse?

{Source IOL}

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