ArcelorMittal South Africa warns Longs business still under threat of closing

ArcelorMittal South Africa (AMSA) states that limited progress has been made in addressing the structural challenges affecting its beleaguered Long Steel Business, raising the possibility that it may begin preparing for closure ahead of the end-September deadline.

AMSA, in a statement to shareholders, stated that it cannot assume any further financial risks related to the Long Steel Business beyond the next few months, as the recent cash injection has already been fully utilised. Without a timely solution, the company may need to begin preparations for an orderly closure before the end of September, although it will continue to fulfil its commitments to customers until that date.

Further updates are expected as part of ArcelorMittal South Africa’s financial results for the six months to end-June 2025, which will be published on July 31.

The company said at the end of March that it would defer the wind-down of the Longs Business until the end of September 2025. This deferral was made possible through a R1.68 billion facility from the Industrial Development Corporation (IDC), which has since been fully drawn to fund operations and working capital.

Despite the efforts of AMSA, the IDC, and the government to stabilise the business and enhance its viability, the steel company has indicated that key structural impediments remain largely unresolved, including export taxes.

AMSA also cited ongoing weak domestic demand, a lack of growth projects, insufficient import protection, and the circumvention of existing tariffs without legal consequence.

ArcelorMittal South Africa added that the continued deterioration in Transnet’s rail service, which it described as the worst performance on record, was a significant issue. It also highlighted high electricity costs, which it said are globally uncompetitive.

The company announced the closure of its long steel business, including the Newcastle facility, in January 2025. Should the unit close, it will have wide implications for major industries such as mining, construction and vehicle manufacturing, with Volkswagen and Isuzu depending heavily on its locally produced steel.

In a trading statement issued ahead of its half-year results, the company said it expects to report a reduced loss compared to the prior comparative period. It anticipates a loss per share of between 82 cents and 93 cents, compared to a loss of R1.09 in the same period last year. Headline earnings per share are expected to improve from a loss of R1.00 to a loss of between 89 cents and 99 cents.

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