ArcelorMittal South Africa (Amsa) will wind down its struggling long steel business, leaving 3 500 jobs hanging in the balance and dealing a blow to the economies of Newcastle and Vereeniging.
In a memo to employees, Amsa CEO Kobus Verster said efforts to secure funding to sustain operations beyond September 30 had failed, Business Day reported on Monday.
“This is not a decision anyone wishes to make, but it is a reality we must responsibly prepare for,” Verster wrote, confirming the company will issue Section 189 notices to affected workers starting today (September 1) as facilities close in phases.
The long steel unit, which accounts for half of Amsa’s operations, has faced mounting challenges, including rising imports, limited tariff protections, soaring electricity costs, and deteriorating rail infrastructure. The business has posted cumulative losses of R1.7 billion since 2023.
In April, the state-owned Industrial Development Corporation (IDC) provided Amsa with a R1.7bn lifeline to delay the closure. Government contributed R417 million in wage subsidies in March to support the unit for 12 months.
Despite these measures, Verster said structural issues remained unresolved, forcing the company to wind down operations.
The IDC told the newspaper last week that it was still engaged in a due process that might see it take a larger stake in Amsa.
The closure raises concerns for South Africa’s automotive supply chain, as Amsa is a major domestic supplier of high-grade steel used in vehicle components. The IDC has focused on developing local speciality steel production to reduce costs for manufacturers facing US tariff hikes.
The National Employers’ Association of South Africa, representing 1 800 businesses and 65 000 workers in the engineering sector, has criticised the government’s effort to prop up Amsa, arguing it distorts competition.
