ArcelorMittal, the world’s largest steel producer led by Indian billionaire Lakshmi Mittal, has announced the imminent closure of its long-steel plants in Vereeniging and Newcastle, South Africa.
This decision follows a year of inconclusive negotiations with the South African government and poses a significant threat to President Cyril Ramaphosa’s $257 billion infrastructure development agenda.
Set to take effect at the end of January, the shutdown jeopardizes critical national projects requiring steel—such as power transmission towers, railways, and roadways—that are integral to South Africa’s economic recovery strategy.
Challenges for Mittal and AMSA
Lakshmi Mittal, whose family holds a 39.87% stake in ArcelorMittal, faces increasing operational and financial challenges within South Africa. AMSA (ArcelorMittal South Africa Ltd.), 56.20% publicly traded, cited numerous reasons for the closures:
- Unreliable freight-rail services disrupted supply chains.
- Rising electricity costs significantly eroded profitability.
- Lack of decisive government support left structural issues unresolved.
Despite sustained negotiations, short- and long-term interventions to address these challenges proved insufficient, compelling AMSA to take drastic action.
“We cannot delay this decision any longer, the government is willing to listen but struggles to act decisively. Could they have done more? Of course.” , said AMSA CEO Kobus Verster.
What this means for South Africa
President Ramaphosa’s ambitious infrastructure boom is at risk, as the materials supplied by AMSA’s plants are vital for completing key national projects. The closures could stall the administration’s efforts to stimulate economic growth, attract foreign investment, and create jobs.
The closures threaten not just South Africa’s infrastructure ambitions but also its broader economy. Key industries reliant on AMSA’s steel—such as automotive manufacturing and mining—are bracing for significant disruptions.
Rand York Castings Ltd., a major steel fabricator, has already signaled plans to relocate part of its operations to India. Additionally, industry groups warn of potential job losses exceeding 100,000, dealing a severe blow to a nation already grappling with nearly 30% unemployment.
“It’s a devastating blow to South Africa’s industrialization and infrastructure-development goals, this is a decision we had hoped could be avoided or at least postponed”, said Lucio Trentini, chief executive officer of the Steel and Engineering Industries Federation of South Africa, which represents over 1,300 companies and 170,000 workers.
What to know
In response, South African Trade Minister Parks Tau has mobilized a task force working “day and night” with AMSA to explore options for averting the shutdowns, according to his spokesperson, Yamkela Fanisi.
As the situation unfolds, stakeholders are closely watching whether government intervention can prevent a crisis that could hinder South Africa’s long-term economic prospects.