South Africa's ArcelorMittal is in talks with the government and trade unions to avoid a planned long-term steel business closure, but on Monday said there were “significant risks” to withdrawing the measure without a change in the business environment. He said he believed there was a “significant risk”.
The South African arm of ArcelorMittal, the world's second-largest steelmaker, announced the plan on November 28, blaming weak demand and persistent infrastructure problems in Africa's cutting-edge economy. He also lamented policies that give scrap metal an advantage over iron ore in steel production. In a trading update, ArcelorMittal said the South African government, industry bodies, trade unions and customers had expressed “widespread concerns” about the economic impact of the closure.
Talks to avoid closure have been constructive and are ongoing, but “finding a solution to the structural deficiencies…is complex,” ArcelorMittal South Africa said. “Reversing the closure decision carries significant risks and requires at least the involvement of the company, its customers and suppliers, the government, state-owned enterprises and employees.”
Job losses in labor-intensive sectors such as mining and manufacturing are increasing pressure on South Africa's ruling African National Congress ahead of elections later this year. The company said it will make further announcements about the planned closures “in the near future.”
This long steel unit produces fencing material, rails, rods and bars used in the construction, mining and manufacturing sectors. ArcelorMittal South Africa plans to report a loss for the full year to December 2023, due to impairment charges of R2.1 billion, primarily related to long operations subject to closure, and difficult trading conditions in South Africa.
The steelmaker is expected to report a full-year loss of between R1.55 and R1.85 per share ($0.0824 to $0.0983), compared with a profit of R2.34 per share in the same period in 2022. ArcelorMittal South Africa is scheduled to release its annual results on the 20th. February 8th. ($1 = 18.8135 Rand)
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