ArcelorMittal South Africa in Talks to Avert Factory Closure

SEATTLE (Scrap Monster): Arcelormittal South Africa ACLJ.J is talking to the government and unions to try to avert the planned closure of its long steel operations, but said on Monday it saw "substantial risks" in reversing the move without changes in the business environment.

The South African unit of the world's No.2 steelmaker ArcelorMittal MT.LU announced the plan on Nov. 28, blaming weak demand and persistent infrastructure problems in Africa's most advanced economy. It also bemoaned policies which gave scrap metal an advantage over iron ore in steel production.

In a trading update, ArcelorMittal said South Africa's government, industry associations, labour unions and customers had expressed "widespread concern" over the economic impact of the closure.

Consultations to avert the closure had been constructive and are ongoing, but "finding solutions to the structural shortcomings ... is complex", ArcelorMittal South Africa said.

"Reversing the closure decision holds substantial risks and requires the commitment of, at a minimum, the company, its customers and suppliers, the government, state-owned enterprises and our employees," it said.

Job losses in labour intensive sectors such as mining and manufacturing have added pressure on South Africa's ruling African National Congress ahead of elections later this year.

The company said it would make a further announcement on the planned closure "in the near future".

The long steel unit produces fencing material, rail, rods and bars used in the construction, mining and manufacturing sectors.

ArcelorMittal South Africa is set to report a loss in the full year to December 2023, mainly due to a 2.1 billion rand impairment charge relating to the longs business targeted for closure, as well as tough trading conditions in South Africa.

The steelmaker will report a full-year headline loss per share between 1.55-1.85 rand ($0.0824-$0.0983), compared to a profit of 2.34 rand per share over the same period in 2022.

ArcelorMittal South Africa is scheduled to release its annual results on Feb.8.

 Courtesy: www.reuters.com