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ArcelorMittal South Africa to close Saldanha operation

The company says the site is suffering severe financial losses forecast to continue for the foreseeable future.
ArcelorMittal South Africa says the process to wind down the Saldanha operation will begin immediately and is expected to be completed during the first quarter of 2020. Image: Waldo Swiegers/Bloomberg

ArcelorMittal’s South Africa unit said on Monday it would close its steel operations at Saldanha Works in the south of the country because it could no longer compete in export markets.

The company, majority-owned by ArcelorMittal, announced in September that it could close some operations as part of a review aimed at strengthening long-term sustainability amid cheap imports, rising costs and a flagging local economy.

In a statement, the company said it would undertake an orderly and commercial wind-down of the Saldanha operation, which its website says employs 568 staff and produces 1.2 million tonnes of steel per annum.

“Saldanha… has lost its structural competitive cost advantage to effectively compete in the export market, mainly due to raw material and regulated prices,” the statement said, adding the site is suffering severe financial losses forecast to continue for the foreseeable future.

The process to wind the operation down will begin immediately and is expected to be completed during the first quarter of 2020, it added.

ArcelorMittal South Africa, which has for some time complained about cheap imports eating into its business, has also been hit by subdued investment and infrastructure spending in the country, as well as a weak South African economy.

It said on Monday there were constructive discussions ongoing with stakeholders including the government and organised labour to find “alternative solutions to the dire situation in the South African steel industry”.

The next phase of its review will focus on its operations in Newcastle, in the eastern province of KwaZulu-Natal and some long-steel products rolling facilities, it continued, adding that exploration of the benefits of a concentrated operating footprint will be central to this.

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Mr CR. This is not a pledge. This is fact.

The Rand is close to 25% weaker from 2018 and they still can not compete internationally? Does not bode well for any industry.

The cost of socialism is not social at all is it?

So ja – after all the years!! But then again it was established under Apartheid and as such should go ne !!

Yep.

Transformation is now complete.

anything that worked under apartheid must go.

Not to worry. The ocean is full of snoek and crayfish. Free for the taking.

Isn’t the CEO the same clown that left Aveng in the mess it’s in?

Side bet : a Chinese company will buy it out. Unless Arcelor prevents this by strategically choosing to mothball so as not to allow a competitor to get a cheap foothold.

There are dozens of grain silos in SA that stand vacant because the original operator does not want to sell and allow somebody else into an area – even if the original operator can’t make those silos work feasibly.

If Arcelor mothballs Saldanha – do they trigger their rehab obligations?

Classic case of private sector mismanagement.

Why is this happening, what went wrong?

End of comments.

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