South Africa’s economic challenges are not going away very soon and the latest proof of this is coming from solid minerals giant, ArcelorMittal which is presently planning to shut two mills even as it is reviewing operations at its largest plant in the country.
The move which industry watchers say will throw yet some more South Africans into the labour market is coming even as the money-losing unit of the world’s biggest steelmaker struggles with weak demand and lower prices.
South Africa last week raised the import tariff on steel to 10 percent, the maximum level allowed by the World Trade Organisation, to be in line with its steel making peers.
ArcelorMittal said in a statement that trading conditions have continued to worsen since it started reviewing its long steel business in July, adding that the higher import duty will only bring relief over the medium to long term.
ArcelorMittal said it had started discussions with unions about the closure of two mills, cutting as many as 400 jobs, at its plant in Vereeniging, about 60 km south of Johannesburg.
Operations at the company’s largest plant, in the nearby town of Vanderbijlpark, continues to be unprofitable and will be reviewed before the end of October, the firm said.
“The company will first consider implementing alternatives before retrenchments are implemented, as a last resort,” it said.
ArcelorMittal has also launched applications with South Africa’s state-run international trade commission to impose anti-dumping duties on cheap Chinese steel and it is being suggested by analysts that the Zuma administration may be compelled to vote along with the company .