ActionSA has expressed concerns with steel producer ArcelorMittal South Africa’s decision to wind down its long-products business, which will result in about 3 500 job losses, and is calling for a comprehensive review and overhaul of the country’s industrial policies, while the Economic Freedom Fighters (EFF) said it was unsurprised by the company’s announcement. 

ArcelorMittal CEO Kobus Verster expressed “deep regret” over the decision, but said it was made because the structural challenges facing the longs business could not be resolved as envisaged when ArcelorMittal South Africa reversed an earlier wind-down decision in February last year.

These included weak economic growth, high logistics and energy costs, and an influx of low-cost steel imports, particularly from China, where hot rolled coil and rebar prices retreated to below $500/t in the fourth quarter and from where exports rose to record levels.

Production at the Newcastle Works, which has been operating under the threat of closure since late 2023, is anticipated to cease by late January 2025, with the wind-down of the remaining production processes completed in the first quarter of the year.

The wind down will also affect the Vereeniging Works, in Gauteng, and the ArcelorMittal Rail and Structural unit, which is located at the old Highveld Steel facility, in Mpumalanga.

ActionSA MP Alan Beesley said his party wants “evidence-based” industrial policies that are “capable” of addressing the country’s economic challenges.

“Policies like the Price Preference System and export duties must be reassessed, as they have failed to support long-term industrial growth and stability,” said Beesley.

He said ArcelorMittal South Africa’s closure is a stark reminder of the “deep-rooted flaws” in the country’s industrial and economic policies.

“As the largest steel producer in the country, ArcelorMittal’s decision to wind down its Long Steel Business is a devastating blow to workers, their families, and the communities of Newcastle and Vereeniging, further compounding South Africa’s unemployment crisis,” he noted.

With an unemployment rate of 32.1%, he said South Africa cannot afford such losses and warned that the impact of the closure will reverberate across industries and households, which he said will undermine any hope of economic recovery.

GOVERNMENT’S FAILURES

Beesley indicated that ArcelorMittal’s reasons for the closure are “clear indicators of the government’s failure” to address the institutional issues crippling the country’s economy.

“Even more concerning is the company’s acknowledgment that, despite engaging with the government to explore solutions, no sustainable path forward could be found. The closure lays bare the ‘ineffectiveness’ of the current government.

“…despite promises of inclusive economic growth, the expanded cabinet has shown more interest in overseas travel and political posturing than in generating economic growth and creating jobs,” he said.

Meanwhile, the Economic Freedom Fighters (EFF) said it was not surprised by ArcelorMittal’s decision to proceed with retrenchments after a year-long delay, which came following guarantees by government that concerns around railway infrastructure and rising levels of crime would be resolved.

The party said the delay in retrenchments, based on an unverifiable plan by government, was nothing but a “malicious electioneering tactic”.

“The retrenchments were being postponed in order to cushion a negative electoral outcome for the then ruling party,” the EFF claimed.

“The retrenchments by ArcelorMittal are testament that the narrative perpetuated by the African National Congress-Democratic Alliance (ANC-DA) grand coalition, which suggests that their coalition is the best for private sector investment, stable economy and job creation are self-serving myth,” the party stated.

The EFF said the Government of National Unity was a “political pact of the neo-liberal elite”.  

It pointed to a “massive de-industrialisation” of the country and warned that unemployment levels will continue to sky-rocket under the ANC-DA coalition.