ArcelorMittal South Africa to Wind Down Operations

(3 Minutes Read)

The R1.1 billion operating loss in its long steel business is nearly double the R600 million reported in 2023. Another blow to the income statement was the 209,000 tonnes in lost production due to blast furnaces being out of operation for several weeks.

The decision by ArcelorMittal South Africa (Amsa) to wind down its long steel business in the face of cut-price imports from China has blown a R1.1 billion hole in its balance sheet, contributing to the R5.1 billion headline loss for the 2024 financial year.

The R1.1 billion operating loss in its long steel business is nearly double the R600 million reported in 2023. Another blow to the income statement was the 209,000 tonnes in lost production due to blast furnaces being out of operation for several weeks.

Amsa’s troubles were aggravated by its crippling reliance on state-owned suppliers of energy and transport. It spent R3.2 billion buying electricity from Eskom in 2024, up 14% from 2023.

Over the past decade, energy tariffs paid by Amsa have gone up 835%, while poor performance by Transnet Freight Rail resulted in lost production and sales, with rail tariffs outstripping inflation over the last three years.

Amsa hit the panic button last year when the scale of imports from China began to threaten the viability of its long business. It called on the government to raise tariffs on steel imports to save SA’s domestic steel production, and to review its subsidisation of scrap-based steel makers that compete with it.

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The group’s deteriorating cash position – aggravated by R2.7 billion in impairments in the long business over the last two years – was softened when the parent company increased its shareholder loan in Amsa to R5 billion from R3.7 billion. To further preserve cash, Amsa cut back on its capex by almost a third to R902 million.