ArcelorMittal likely to shut plant in South Africa; 1000 workers affected

Johannesburg: The world's largest steel maker ArcelorMittal's South Africa unit has said it will retrench nearly 1,000 workers and shut down its Saldanha plant due to severe financial losses, amid a global downturn in the steel industry.

Global steel magnate Lakshmi Mittal's ArcelorMittal is the world's leading steel and mining company, with a presence in 60 countries and an industrial footprint in 18 countries.

As part of a strategic review of its operations, the steel manufacturer found that its Saldanha operations had lost their competitive cost advantage to compete in the export market, "mainly due to raw material and regulated prices", the company said in a statement.

"This difficult decision was taken in the context of constructive ongoing engagements with key stakeholders, including government and organised labour, to find alternative solutions to the dire situation in the South African steel industry," the company said.

The South African government has expressed "disappointment" at the decision of ArcelorMittal South Africa (AMSA) to retrench nearly 1,000 workers across the company and to shut down its operations in Saldanha town.

"This comes despite significant efforts by Government and public agencies to provide additional support to AMSA over the last few months, and to ensure a solution which would result in the elimination of job losses across the company and the continuation of the Saldanha Works," said Department of Trade and Industry.

"The recent efforts of the government are additional to extensive trade support which has been provided to the steel industry over the last few years to ensure protection from imports, including safeguards on imported hot rolled steel. In addition, the government has designated the steel industry to ensure that steel procured for infrastructure projects is locally produced," it said in a statement.

AMSA's South African operations, acquired from former state-owned steel manufacturer Iscor almost two decades ago after Mittal first helped turn it around, has been under pressure for the past few years amid a global downturn in the steel industry.