Govt Vows Support as AMSA Winds Down Longs Steel Business at Newcastle Plant

The dtic emphasized that the steel industry is integral to government initiatives focused on industrialization, localization, and beneficiation.

The Department of Trade, Industry, and Competition (dtic) has reiterated the critical role of the steel industry in South Africa’s reconstruction and economic recovery plan, particularly in manufacturing, mining, construction, engineering, and transportation.

This response follows ArcelorMittal South Africa’s (AMSA) announcement to wind down its longs steel business operations at the Newcastle plant in KwaZulu-Natal.

The dtic emphasized that the steel industry is integral to government initiatives focused on industrialization, localization, and beneficiation. These programs are designed to drive economic growth, create jobs, and strengthen South Africa's infrastructure.

“The department notes with serious concern the announcement by AMSA to wind down its longs steel business at the Newcastle plant. The dtic remains committed to collaborating with AMSA and other stakeholders to find sustainable solutions,” read the department’s statement.

Efforts to Address Industry Challenges

In response to AMSA’s earlier requests for concessions, the Minister of Trade, Industry, and Competition initiated a technical working group in 2024. This group includes stakeholders from AMSA, the departments of Electricity and Energy, Transport, Eskom, Transnet, and private sector representatives. The group has held regular meetings, including sessions through December 2024, aimed at addressing the challenges raised by AMSA.

The key issues impacting AMSA’s operations include:

• Weak economic growth.
• High logistics and energy costs.
• An influx of low-cost steel imports, particularly from China.
• Insufficient policy interventions regarding the scrap metal sector.

Details of AMSA’s Decision

In a statement on Monday, AMSA attributed its decision to the continued unsustainability of its longs steel business. Contributing factors include:

• Persistent high costs in logistics and energy.
• The effects of the Price Preference System (PPS) and export scrap tax, which subsidized scrap-based steelmaking operations to the detriment of Newcastle Works.

AMSA plans to transition its longs business into care and maintenance, with steel production ceasing by late January 2025 and the wind-down of production processes concluding in Q1 2025. This decision impacts operations in Newcastle, Vereeniging Works in Gauteng, and AMRAS (the rail and structural subsidiary).

While Newcastle’s coke-making operations will continue, they will be scaled back to reflect reduced demand.

Broader Economic and Sectoral Goals

The dtic underscored the need for comprehensive strategies to revitalize the steel sector. These include:

• Addressing structural inefficiencies in production and supply chains.
• Investing in low-carbon technologies to enhance sustainability and competitiveness.
• Encouraging local procurement of steel products by public and private sectors to boost demand and job creation.

The department noted that revitalizing the steel industry requires a collective commitment from all stakeholders to ensure its long-term viability and contribution to South Africa’s economy.

Looking Ahead

The dtic reaffirmed its intention to continue engagements with AMSA and other stakeholders to achieve a workable resolution. “The immediate focus is addressing the challenges at AMSA’s longs steel business, but a broader outlook must include strategies for market competitiveness, productivity improvements, and alignment with global green industry standards,” the department stated.

This development signals the need for proactive measures to protect one of South Africa’s most critical industries while ensuring resilience against future economic challenges.