The company has also obtained a 1 billion rand ($54.29 million) working capital facility to support continued operations. Bloomberg Photo
ArcelorMittal’s South African division has decided against shutting its steel plant in the KwaZulu-Natal province and is working on a plan to make it viable, it said on Tuesday, more than six months after announcing its closure.
The company’s Johannesburg-listed shares fell 12.1% by 1004 GMT after a trading update said that losses would widen because of tough market conditions and disruption at its Vanderbijlpark furnaces, where it produces flat steel products.
It expects to report a headline half-year loss per share between 0.96 rand and 1.04 rand, compared with a headline loss of 0.40 rand per share in the same period last year.
The decision to shelve closure of the long steel operations, which produce fencing material, rods and bars used in sectors such as construction, mining and manufacturing, will save 3,500 direct jobs and thousands more indirectly, ArcelorMittal South Africa CEO Kobus Verster said on a media call.
In January the South African unit of the world’s second-largest steelmaker by output delayed the closure of the business by up to six months as it engaged with government and labour to resolve issues hitting profitability and to avert job losses.
The board and management have decided that the business will continue to operate to allow full exploration of the short, medium and longer-term initiatives aimed at securing its sustainability, ArcelorMittal South Africa said.
Announcing the planned closure last November, the steelmaker had blamed weak demand and infrastructure problems in Africa’s most advanced economy. It also bemoaned policies that gave scrap metal an advantage over iron ore in steel production.
ArcelorMittal South Africa on Monday noted some improvements in electricity generation as well as port and rail efficiencies.
The non-renewal of a steel scrap export ban after it expired in December 2023 had also started to bring “greater fairness and equity into the input cost structures” between integrated steelmakers such as ArcelorMittal and scrap-based producers, the company said.
The company has also obtained a 1 billion rand ($54.29 million) working capital facility to support continued operations.
First Published: Jul 02 2024 | 4:25 PM IST