It is with regret, that we note the 6 January 2025 announcement by ArcelorMittal South Africa (AMSA) of its decision to wind down its Newcastle operation (‘Longs Business’), placing it in care and maintenance. Coming nearly six years following an earlier decision to wind down the Saldanha operations. This decision to close an operation that produces a wide range of high-quality steel profiles is a sad occasion in the over five-decade life of the steelworks in the northern part of Kwa Zulu Natal. In so doing, the decision is likely to not only affect the over three thousand workers directly and indirectly and the economic life of nearby communities; it is also likely to introduce some supply chain uncertainty for many downstream customers reliant on output from Newcastle.
In successive stock exchange news service (SENS) announcement issued by AMSA, the firm notes that they have been engaged in ongoing discussions since December 2023 with the government on ‘structural issues’ affecting the longs business. These discussions, as AMSA correctly asserts, have been aimed at ‘exploring alternatives’ and policy support to address structural constraints facing the sector. To the degree relevant and within the ambit of our work, the Commission has also been part of these discussions. Especially as they relate to the regulation of the export of scrap metal through the Price Preference Point System (PPS) which ITAC administers and regarding progress on trade measures initiated and under investigation by the Commission in response to allegations of unfair and injurious import competition.
In the case of the PPS, the Commission gazetted in September 2024 a review of the guidelines of the PPS, to consider, among other issues, the desirability of the price discounts ferrous and non-ferrous scrap metals. The Commission is similarly assessing and investigating a few trade remedy applications covering alloy steel coil, rail and hot rolled steel products, where AMSA has alleged that they are facing injurious import competition. The recommendations of these investigations will be made to the Minister of Trade, Industry and Competition once these are concluded. Lastly, following a Ministerial Directive, the Commission is also undertaking a review of the steel tariff structure in the associated chapters in the customs tariff book and other measures to undertake further import surveillance and regulation of upstream, midstream and downstream steel products coming into the country. The outcome of this review is expected this year.
The Commission continues to engage, alongside other departments and public institutions, around what the company terms ‘identified initiatives’ and it is regrettable that they feel that this engagement ‘has not been adequate’. While we welcome improved asset utilization in AMSA’s flats business, we further welcome the opportunity to continue to engage in the dtic-led process to find a solution to the ‘crisis-levels’ of capacity under-utilisation in the Newcastle mill. While ensuring any decisions arising from any of these processes is informed by the balance of evidence and arise from an administratively and procedurally fair process.
ISSUED BY THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION SOUTH AFRICA