In a recent parliamentary Q&A, Minister of Trade, Industry, and Competition Parks Tau revealed that government is fighting tooth and nail to avoid the closure of ArcelorMittal’s (AMSA) long steel plants in Newcastle and Vereeniging.
AMSA is the only producer of the specialty steel in South Africa which is used in vehicle production by the country’s Original Equipment Manufacturers such as BMW, Ford, Toyota, and VW.
The company announced in early 2025 that it would shutter these facilities by the end of January due to an inability to make them profitable. It referenced an unstable electricity grid, road and rail transport issues, and government policies on scrap metal as key drivers behind this move.
Finding a solution
Since the announcement was made, Tau and his department has been actively engaging with AMSA to avoid closures of the important steel mills.
“There are ongoing engagements with AMSA, which are focused on averting the closure of the Longs Steel business in Newcastle,” said Tau in the parliamentary Q&A.
“Other secondary effects will be on companies, which are relying on the long steel for their production needs.”
As Minister, Tau formed a technical working group made up of the Department of Trade, Industry, and Competition (DTIC), the departments of Electricity and Energy, Transport, Eskom, Transnet, and AMSA.
This working group held regular engagements since AMSA first indicated that it may be considering exiting South Africa in an effort to find an amicable solution.
National government through the IDC has, during this period, made financial support to the tune of R380 million in the form of a shareholder loan in order to avert the closure of the longs business whilst the discussions are continuing on its future.
The support additionally enabled the fulfilment of a higher-than-anticipated outstanding order book prioritising automotive and other customers.
“The engagements and discussions are also centred on addressing the role of longs steel in the South African economy, including attracting investments in the sector, dealing with inefficiencies leveraging both public and private infrastructure and built programmes in water, roads, rail, and construction for the benefit of the steel sector and related industries,” said Tau.
“The intervention of the government in this matter is to avert the negative economic impacts that will accrue as the result of the immediate closure of the Newcastle plant.”
The steel industry is critical in the reconstruction and recovery plan for the South African economy, particularly, the manufacturing, mining, construction, engineering, and transportation sectors, which form the backbone of the industrialisation, localisation, and beneficiation programmes of government.
Should AMSA exit South Africa, it could lead to the immediate dismissal of around 3,000 workers in the automotive industry, said the National Association of Automotive Component and Allied Manufacturers.
Accounting for the rail, construction, and defence industries which are also AMSA customers, the association approximates that as many as 100,000 employees are at risk.
It could also elevate vehicle production costs by as much as 25% which could wreak havoc on consumer budgets, especially in the face of an upcoming VAT hike.
Most recently, AMSA indicated that it would require a R3.1-billion rescue package to continue local operations.
It promised that it would delay the closure while negotiations are ongoing and build up a 12-month stockpile to keep its customers afloat as they search for an alternative supplier.
While government fights to keep AMSA up and running, other organisations have suggested that it’s only the product South Africa requires, not the company.
Trade union Cosatu argues that government should let AMSA go and instead focus its energy on finding a local buyer for the steelmaker’s assets.
“ArcelorMittal shifts a lot of blame all over the place; I think one difficulty here is that this is a global company so their South African operations are really secondary, they look at the global price operations and so forth, and we’re really a very small piece on their chess board,” said Cosatu Parliamentary Coordinator, Matthew Parks.
“For us, the simple solution is allow another company to go and buy the operations.”
Parks said “many companies” have already shown an interest in procuring AMSA’s properties and urged the relevant stakeholders to prioritise such a deal.
“What we can’t afford is to close the local steel industry, the local motor manufacturing sector; that would be an absolute disaster that words can not even describe,” he said.
“If AMSA is not keen [to continue operating in South Africa], that’s fine, this is a democracy, but sell your operations and allow a local South African to come and buy it and they must see how they can improve things.”
Parks asserted that government shouldn’t be the one to take on this job as it already has plenty on its plate, but that the next producer of longs steel should preferably be a domestic company with vested interests in South Africa.
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