This is the worst crisis for SA steel since the 2008 financial crisis, says the company. From Moneyweb.
Whether ArcelorMittal SA (Amsa) survives in anything like its current form depends on government extending protective tariffs on imported steel, which accounted for a third of SA’s steel consumption in 2024.
Steel imports increased 9.4% to 1.4 million tonnes in 2024, which will increase dramatically in the current year unless further tariff protections are implemented. Amsa says some 60% of these imports could be made locally.
The volume of imports has doubled since 2018, while overall steel consumption has declined.
“No meaningful improvement in the domestic steel market is anticipated for the next six months. Consequently, actions by the South African government to support the industry and protect it against unfair trade and policy practices are vital,” said Amsa in its financial results presentation for the year to December 2024.
On Thursday, Amsa announced a net loss of R5.8 billion for the year to December 2024, which includes impairments and costs associated with the planned closure of its long steel mills.
Also included in this are severance packages for some 3 500 staff.
The company has delayed the planned closure of its long steel mills in Newcastle and Vereeniging for a month. At the same time, an announcement of the business’s future – pending discussions with the government – is expected later this month.
Read: Tycoon Mittal, Ramaphosa meet over steel woes
Government is under pressure to come to Amsa’s rescue by extending tariff protection to keep out cheap Chinese imports. Last year, the company was awarded a 52.81% anti-dumping duty on structural steel over the existing 10% duty on imported rolled steel.
Amsa also faces competition from local mini-mills using scrap metal as feedstock, which is gifted to them at a 30% discount to market prices through the Price Preference Scheme (PPS), and a 20% export tax on scrap.
The company was granted some reprieve through a R380 million shareholder loan from the Industrial Development Corporation (IDC), and the delayed settlement of another IDC loan of R950 million from 1 June 2025 to 1 September 2026.
“The longs business will only continue with financial support as the company does not have the appetite to bear any financial risk associated with the continued operations of that business,” says CEO Kobus Verster.
Greatest threat since the 2008 financial crisis
Verster added that the South African steel industry is facing its greatest challenge since the financial crisis of 2008/9. International steel-to-raw material price spreads remain under pressure, and countries rush to protect their steel industries against unfair trade and policy practices.
Read: Steel cuts threaten SA’s R4.78tr building drive
Justifying the need for further protection, Verster pointed to the US, Brazil and the EU, all of which regard their steel industries as strategic and have acted against unfair imports.
“South Africa’s response has been slow and insufficient.”
The highest priority for the sector’s future is the revision of the PPS, the export tax, and the administrative policies that prefer scrap producers over Amsa.
The extent of Amsa’s pain is detailed in its annual results, which show SA’s crude steel production for 2024 falling 5% to 4.7 million tonnes, while global production fell just 0.9%.
The steel environment in SA was challenged by weak economic growth in 2024, with local sales volumes falling 8% to 1.8 million tonnes, compounded by a 4% drop in realised rand prices.
Read: Carmakers beg ArcelorMittal to delay SA mill closures
The company’s electricity consumption has decreased substantially since 2007, while electricity tariffs have grown 835%.
Plant capacity utilisation, at 63%, was down from 67% in 2023, though it improved to 69% in the second half of 2024.
The raw material basket used by Amsa remained flat in rand terms, whereas international producers benefitted from a 13% drop in rand terms. Fixed costs were held to a 2% increase.
Revenue declined to R38.6 billion from R41.6 billion in 2023, while the headline loss increased to R5.1 billion from R1.89 billion in 2023.
Read: ArcelorMittal South Africa to close long-steel works, sees loss
There were some notable areas of improvement: the flats business, cash management and capacity utilisation. There have been discussions around a R1 billion rescue package for Amsa, though this has yet to be confirmed by government, which is considering a tariff relief package. At the same time, the International Trade Administration Commission (Itac) undertakes a complete review of tariff codes governing the steel sector.
