Some ArcelorMittal South Africa businesses are still facing challenges, as negotiations failed to prevent the closure of long steel operations, which are loss-making for the company. Among the main challenges is low domestic demand, high electricity costs, poor infrastructure, and competition, such as local mini-factories, which are only increasing in the number of imports, threatening thousands of jobs and the entire production chain in the country.
ArcelorMittal South Africa struggles to save itself in the face of structural challenges
Talks with the South African government have so far yielded little progress to avert the closure of loss-making long steel operations at ArcelorMittal South Africa ACLJ.J, the company said on Monday. The South African unit of world number two steelmaker ArcelorMittal SA MT.LU initially said in November 2023 it planned to close the two plants, citing weak domestic demand, high electricity tariffs, poor freight logistics and competition from local scrap metal recycling mini-mills and imports from China.
“Regrettably, limited progress has been made to date in redressing the major structural impediments,” ArcelorMittal South Africa said in a trading update. It said the closure could no longer be postponed beyond September 30 unless a solution is found soon. South Africa’s trade and industry minister Parks Tau told lawmakers on July 4 that the government was in “firefighting mode” as it tries to avoid the closure of ArcelorMittal’s operations in KwaZulu Natal and near Johannesburg.
The closure of the plants, which supply rail, roads and bars to the construction, mining and manufacturing sectors as well as components for the automotive industry, has been deferred twice as the company and the government sought to save the 3,500 jobs directly under threat. In March, the steel company postponed the closures to September 30 after the state-owned Industrial Development Corporation injected 1.683 billion rand ($94.22 million) in cash.
What is the impact of imports and logistics infrastructure on the crisis?
The South African market has been flooded with imports. Today, these consume more than 35% of local steel demand. Meanwhile, the deterioration of freight rail services is reaching historic levels and significantly increasing operational risks. These are some of the factors that, when combined, led to a drop of approximately 10% in sales volumes in the first half of 2025. This scenario further pressures the company’s ability to operate sustainably.
Imports have flooded the domestic market, taking up more than 35% of local steel demand, while freight rail service “deteriorated to its lowest levels ever, resulting in significantly elevated operating risk,” the steelmaker’s statement said.
ArcelorMittal South Africa expects to report a headline loss per share between 0.89 rand and 0.99 rand ($0.0498-$0.0554) for the six months to June 30, narrowing its loss from 1 rand per share during the same period last year. Sales volumes declined by about 10% in the first half of 2025 compared to last year, the company said. ArcelorMittal South Africa will release its half-year financial results on July 31.
Logistics challenges put pressure on ArcelorMittal’s profitability
Despite the State’s financial support, which is being provided through the Industrial Development Corporation—which has injected more than 1.6 billion rand—structural difficulties still dominate the scenario, hindering the path to recovery of operations and requiring rapid solutions from the company to avoid the permanent closure of the plants.
Government and industry are under pressure to act
Postponing the factory closures until September 2025 highlights the economic and social importance of these operations, particularly as they supply strategic sectors such as construction, mining, and automotive, and employ approximately 3,500 workers. There is an urgent need to find alternatives that can balance financial viability and job preservation in the current scenario.
The sector’s competitive tensions at a global level are evident in the situation of ArcelorMittal South Africa, as well as local industrial sustainability. If negotiations fail to yield significant progress and structural improvements, the future of operations remains uncertain and could be at risk, not only in steel production but also in the economic and social stability of the regions involved in this sector.
GCN.com/Reuters