WeeklySA_AdminCRUNCH: Apart from the 3 500 jobs at immediate risk, the closure of the country’s steel manufacturer’s plants will endanger about 100 000 jobs in the value chain…
By Pavan Kulkarni and WSAM Reporter
The National Union of Metalworkers of South Africa (NUMSA) picketed the offices of the Industrial Development Corporation (IDC) last Friday, demanding urgent government action to prevent the closure of the Long Steel production plants of ArcelorMittal South Africa.
A total of 3 500 employees are at the immediate risk of losing their jobs at the company. But the stakes are even higher if this closure by South Africa’s largest producer is not prevented, because many industries downstream, particularly in the automotive sector, depend on ArcelorMittal SA (AMSA) long steel production for the bulk of its domestic inputs.
“If we look along the value chain in the downstream, we are actually going to be losing no less than 100 000 jobs” at a time of “massive unemployment and deepening levels of poverty,” said NUMSA’s deputy-general Secretary, Mbuso Ngubane, addressing the picketing workers.
“One of the auto companies, Toyota South Africa, has informed us that in assembling their cars, they source not less than 17,000 tons of steel from AMSA.”
If AMSA shuts down these plants, “Toyota will shut down its operations in May and it could take more than six months for them to find an alternative supplier that will meet their specification,” reads NUMSA’s memorandum received by the Department of Trade and Industry and Competition.
“The automotive sector uses some 70 000 tons per annum of specialty Long Steel products, with AMSA being the only local source. The automotive sector requires at least 12 months to certify another supplier due to the safety-critical nature of the steel,” added the memorandum.
In the absence of other local suppliers who can fill in the shortfall, the closure of AMSA’s Long Steel plants will jeopardise South Africa’s strategically important auto industry, “which relies on high-grade specialised steel products… which only AMSA in South Africa can manufacture.”
Outcompeted by cheaper steel imported from “heavily subsidised” foreign producers who are “dumping” steel in the South African market, the union added that AMSA has demanded “relevant import tariffs and import-licensing” from the government to keep its long steel plants afloat.
“It is the union’s firm view that the government must do whatever it takes to protect South Africa’s specialty Long Steel capacity coming out of AMSA’s plant in the city of Newcastle,” NUMSA said in its memorandum.
Warning that “the failure to arrest this crisis at AMSA will be catastrophic in the manufacturing sector” and a “setback to the rest of the South African economy,” it stressed, “we cannot afford to lose such capacity, especially against the backdrop” of ongoing de-industrialisation.
Also joining the picket alongside the employees of AMSA’s Newcastle plant were the workers of SA Steel Mills, which entered a business rescue process in September 2024. During this process, a financially distressed company is protected from claims by creditors, while the Business Rescue Practitioners (BRPs), who exercise control in the meantime, work out a turnaround strategy to render the company financially viable.
However, NUMSA maintains that the well-paid BRPs are only “milking the process for selfish benefit,” without resolving the crisis, while ”our members are unable to earn any income.” They are not even able to claim anything from the Unemployment Insurance Fund (UIF).
“The IDC must ensure that workers get their UIF while the process is still unfolding, so that they can get a source of income,” demanded the separate memorandum submitted on behalf of NUMSA members employed at the SA Steel Mills.
Meanwhile, ArcelorMittal CEO Kobus Verster and his team have been in talks with the Department of Trade, Industry and Competition (DTIC) since December 2023 to find ways of averting the closure of steel operations.
Daily Maverick reports that ArcelorMittal asked the department for protection measures, including an export tax relief on steel and measures to level the playing field in the face of cheap steel imports (particularly from China), and intense competition from scrap-based steelmakers, whose competitiveness has been bolstered in recent years by government policy.
ArcelorMittal first announced in November 2023 that it would shut down its steel operations that were performing at a loss due to Eskom blackouts, Transnet’s inability to rail goods to market and the government’s policy blunders in not protecting the local steel industry.
DTIC introduced a new preferential pricing system for scrap, a 20% export duty and a ban on scrap exports that have given steel production via electric arc furnaces an “artificial” competitive advantage over steel manufacturers that use iron ore to produce steel.
ssThis has meant scrap metal traders who recycle steel are gaining an advantage over ArcelorMittal’s more intense operations such as Newcastle, which consumes heavy raw materials such as iron ore, according to the Daily Maverick report.
ArcelorMittal also blamed lower demand for steel products owing to a weak domestic and global economy.
For its part, government has said it has engaged ArcelorMittal’s leadership as well as its customers and suppliers to identify concrete measures that can assist to support primary steel-manufacturing in South Africa.
“The expected improvement in infrastructure spending, coupled with turnaround plans on transport logistics and commencement of trade under the African Continental Free Trade Area (AfCFTA), will all play a positive role in strengthening both demand and supply side challenges in line with the objectives of the steel master plan,” DTIC said in a statement recently. – People’s Despatch, additional reporting by Daily Maverick
