ArcelorMittal South Africa to sack 3,500 workers and close long steel unit; shares plunge 17% | Mint
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Business News/ Industry / Human Resource/  ArcelorMittal South Africa to sack 3,500 workers and close long steel unit; shares plunge 17%
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ArcelorMittal South Africa to sack 3,500 workers and close long steel unit; shares plunge 17%

ArcelorMittal South Africa says steel consumption in Africa's most advanced economy has fallen 20% over the past 7 years, due to limited infrastructure spend and project delays

ArcelorMittal South Africa Ltd, controlled by ArcelorMittal SA, employed about 9,300 workers, including contractors. (REUTERS)Premium
ArcelorMittal South Africa Ltd, controlled by ArcelorMittal SA, employed about 9,300 workers, including contractors. (REUTERS)

ArcelorMittal South Africa Ltd on Tuesday said it plans to shut down its long steel operations due to weak demand and persistent infrastructure problems, which will result in layoff of around 3,500 jobs.

In a statement, the steelmaker said that steel consumption in Africa's most advanced economy has fallen 20% over the past 7 years, due to limited infrastructure spend and project delays.

South Africa's persistent rail logistics problems and an intensifying electricity crisis had also added costs to the business, ArcelorMittal South Africa added.

“In the circumstances, the ArcelorMittal South Africa Board and Management have had no option but to embark on a process that contemplates the wind down of the Company's Longs Business, which for now may be placed in care and maintenance," said the company.

The 3,500 jobs that could be affected include full-time staff and contractors, said ArcelorMittal South Africa.

The steelmaker, controlled by ArcelorMittal SA, employed about 9,300 workers, including contractors.

After the announcement, shares of ArcelorMittal South Africa plunged as much as 17% in Johannesburg.

“The ArcelorMittal South Africa board and management have reached this point after having exhausted all possible options," Chief Executive Officer Kobus Verster said in the statement. “We have a duty to ensure that the business remains sustainable in the long term, in the interests of the company and its stakeholders."

ArcelorMittal South Africa’s long steel unit produces fencing material, rail, rods and bars used in the construction, mining and manufacturing sectors.

It also produces foundry, flat steel and tubular products.

On the back of South Africa's electricity crisis, high inflation and weak demand from key steel consuming sectors, the company had reported a headline loss of 448 million rand in the first half to June 30, as compared with a 3 billion rand profit in the same period of the previous year.

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Published: 28 Nov 2023, 05:14 PM IST
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