ArcelorMittal workers yet to be notified of impending closure amid renewed cries for intervention

Workers at steel producer giant ArcelorMittal South Africa (Amsa) in KwaZulu-Natal are yet to be formally informed of the company’s impending closure of its long products business while a union and the provincial government call for efforts to save thousands of jobs.

Amsa announced the imminent closure of the mill on Monday, citing unaffordable energy and logistic costs, and surging low-cost steel imports into the country, particularly from China, as some of the main contributing factors.

The wind down will affect all Amsa long steel plants, including the Newcastle Works in northern KwaZulu-Natal, Vereeniging Works in Gauteng, as well as the rail and structures subsidiary Amras at the old Highveld Steel facility in Mpumalanga.

This is expected to impact 3,500 direct and indirect jobs. Furthermore, Newcastle’s coke (coal) operations will continue at a reduced scale to reflect the reduced demand.

The KwaZulu-Natal government anticipates this will result in more than 2,000 direct jobs losses in the city.

Operations were under threat since November 2023 when the company first highlighted structural challenges facing its long steel business which was forcing it to shut down production.

That was put on hold after the government called for further engagements to see if the matter could be averted, and a task team was established. However, the company said its year-long engagement with government to come up with a plan to save its long steel business did not prove successful.

Amsa’s request for assistance from government included:

• a 15% reduction in Eskom tariffs and relief from load-shedding;
• reliable and cost-effective steel transportation from Transnet;
• addressing fair competition and business practices; and
• reviewing industry policies such as the Scrap Price Preference System and Export Scrap Tax.

Amsa CEO Kobus Verster said efforts to work with government to avert the planned closure could not come to a sustainable solution.

“The issues tabled for resolution sought to level the playing field against international and local competitors. The issues raised outlined the factors that could have, and still can, firmly address the structural problems, specially for our longs business, but also within the company, the South African steel industry and value chain,” he said.

KwaZulu-Natal economic development, tourism and environmental affairs MEC Rev Musa Zondi has since written to trade, industry and competition minister Parks Tau requesting further consultations with the steel group to address the “impending crisis”.

“The closure of Amsa’s Newcastle and Vereeniging operations could devastate the local economy, leaving thousands without work and negatively impacting regional suppliers. Furthermore, if this is not resolved, it will have a ripple effect on the broader economy of KwaZulu-Natal, threatening economic stability and growth in the province. We urge the minister to explore all possible solutions to prevent the closure, including further dialogue with Amsa and stakeholders,” said Zondi.

He noted that Amsa, as the biggest supplier of steel in the country, was among the largest employers in the region and the closure of its provincial operations would pose a severe threat to the livelihoods of workers.

Zondi’s sentiments were supported by National Union of Metalworkers of SA (Numsa) KwaZulu-Natal secretary Mzamo Khoza.

Khoza told TimesLIVE they will engage with Amsa, the government and all relevant stakeholders to alert them about the impact of the company’s wind-down. He said the closure of the Newcastle mill would have a ripple effect on a number of companies and thus their workers in the value chain.

“It is the biggest supplier of steel so the impact will be huge. Amsa is like the bread and butter for the people of Newcastle and KwaZulu-Natal so it will affect a lot of people in the value chain and other companies in the automotive industry, for example, such Toyota. We organise through the value chain so we know it will affect other companies as well.”

Amsa anticipates steel production will cease by late January, with the winding down of the remaining processes completed within Q1 of 2025.

The company said it will commence with the formal notice to trigger section 189(3) of the Labour Relations Act shortly.

Khoza said the union is yet to discuss the matter internally because it had not been issued with the formal notice as of Tuesday.

“We haven’t met to have a discussion. The employer has to trigger the notice which will make us kickstart the discussions. We will then go back to our members to solicit a mandate but for now we don’t have a business case,” he said.

The act makes provision for a period of 60 days between issuing a notice and commencing with process of any large scale retrenchments, unless all parties come to an agreement, he said. However, Khoza could not confirm or deny that it would challenge the retrenchment if it was to be implemented before the 60-day period.

“The employer understands there is a statutory requirement for them to issue the notice within the stipulated amount of time. It’s not the first time they are embarking on such, so it’s nothing new to them.

“We can, of course, exercise our right to challenge them legally, but the correct path is to first get the substantive reasons for shutting down the plant and then discuss.

“The employer will have to comply. This cannot only be the responsibility of Numsa and employer. Government will have to come through because this affects multiple industries.”

TimesLIVE