World largest steelmakers ArcelorMittal South Africa unit is set to retrench close to 1,000 workers and shut down its Saldanha plant. The retrenchment and shut down is due to severe financial loss and the global downturn in the steel industry.
Also, ArcelorMittal is the world’s leading steel and mining company owned by Lakshmi Mittal. So it was acquired from former state-owned steel manufacturer Iscor almost two decades ago after Mittal first helped turn it around. Hence, the company has its presence in over 60 countries across the world and an industrial footprint in 18 countries.
A strategic review of the company’s operation found that the Saldanha plant has lost its competitive cost advantage in the export market. This is as a result of raw materials and regulated prices.
The statement by ArcelorMittal read: “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”.
Meanwhile, the South African government has expressed its disappointment in the Company’s decision to retrench close to 1,000 workers and shut down the Saldanha plant.
The Department of Trade and Industry stated that job loss will further increase the rate of unemployment in the country.
Decline in ArcelorMittal Operations
So, ArcelorMittal South African operations has been under pressure for the past few years amid a global downturn in the steel industry.
Mittal himself met senior government officials last year as AMSA sought to downscale its operations at Vanderbijlpark, threatening the livelihoods of an entire town that depended on employment at the company.
Minister of Trade and Industry Ebrahim Patel also met with the management of AMSA on several occasions while in recent months to explore opportunities to save jobs and keep all of AMSA’s plants in operation.
ArcelorMittal has reported a net loss of USD 539 million for the July-September quarter of 2019 hit by lower steel shipments. And also prices with high material costs.
Furthermore, sales of the company declined to USD 16,634 million in the July-September quarter from USD 18,522 million in the year-ago period.