ArcelorMittal (SA) has confirmed that it is mothballing its long-steel operations at its Newcastle Works, Vereeniging Works, and the rail and structural subsidiary, AMRAS which will have a devastating impact on surrounding communities, suppliers, contractors, and the broader metals and engineering sector says the Steel and Engineering Industries Federation of Southern Africa (SEIFSA).
“SEIFSA have repeatedly warned of a socio-economic catastrophe should ArcelorMittal shutter its plants,” says Eliage Monage, SEIFSA President. “Some of the alarming estimates over and above the reported 3 500 direct jobs on the line are the medium-term impact of second round effects in the order of 20 000 to 25 000 jobs and in the longer-term, multiples of more than this. The effect of this latest development will reverberate throughout the economy and the continent, impacting the auto, motor, construction, and mining sub-sector of the economy and all who work in it.”
This development presents a major setback to the base of the industrial sector and industrialisation more broadly, he says. “The tragic reality is that the lofty goals set by the Steel Master Plan (SMP) to charter a roadmap to reenergise the sector, expand production, and increase demand across the steel and fabrication industry value chain and to introduce an industrialisation programme, have failed dismally.”
“The SMP was meant to deliver a comprehensive industrial policy framework where a total, inclusive, industry perspective would be taken and complementarities across the value chain enhanced. Sadly, what we are witnessing is the opposite wherein policy is implemented in a fragmented manner with a short-term view and with pockets of industry being pit against each other.”
Monage says that ArcelorMittal’s year-long plea for help from the government has been unsuccessful. “The fact of the matter is that ArcelorMittal never had a prayer – sadly we have seen this play out before with the closure and mothballing of Highveld Steel and Saldanha respectively, all at the feet of a dithering government too slow to react and offering too little too late. For South Africa’s economy, ArcelorMittal’s decision means that there will be fewer players in the country producing long-steel products such as fencing material, reinforcing bars, beams, rails and profiles that are used in the construction, mining and manufacturing sectors.”
SEIFSA says that the downsizing at ArcelorMittal highlights three key industrial-policy tents. “Firstly, if government lacks the capacity to do everything, then it should focus on its core functions – which in the economy means infrastructure, building human and social capacity and maintaining security. Second, government’s role in industrial policy is to shape an enabling environment that aligns national and business interest. It is not to mediate short-term compromises between competing stakeholders. Finally, industrial policy should be used to rescue struggling industries or companies, especially where the long-term socio-economic benefits outweigh the costs.”
A sectoral engagement between Minister Parks Tau representing the Department of Trade Industry and Competition (DTIC) and the Metals and Engineering Sector took in late November 2024 which sought to provide a platform wherein the Ministry and industry could come together to develop a way forward to arrest the rapid decline in the sector’s performance.
“The closure of ArcelorMittal’s long-steel business is a profound policy failure. Nevertheless, steel still has the potential to be the core of the re-industrialisation programme for South Africa. What is now required on an urgent basis in the face of this crisis is leadership – a focused character and decisiveness – that up an until now has been missing and without which we will be doomed to the same results, with negative consequences for the long-term sustainability of the metals and engineering sector,” concludes Monage.
