ArcelorMittal needs R3.1 billion to save thousands of jobs

ArcelorMittal South Africa is seeking a R3.1 billion rescue package to stave off the closure of crucial steel mills in the country, Sunday Times reported. 

The funds from Industrial Development Corp. (IDC) — a national finance institution that has a 6.4% stake in the company — would prevent the full idling of its long-steel plants slated for the second quarter, staving off the loss of about 3,500 direct and indirect jobs, the newspaper reported, citing people it didn’t identify. 

The company known as AMSA initially planned to shutter the Vereeniging and Newcastle facilities at the end of January, and later postponed this by a month to fulfill orders.

Rescue talks with the government have failed to yield results and the operating environment has deteriorated amid high power and transportation costs and cheaper imports. 

AMSA wants antitrust laws relaxed to enable it to merge with smaller mills and lower electricity prices from state-owned utility Eskom, the newspaper reported, citing the people. 

The steel producer isn’t in a position to communicate further on the matter, spokesperson Tami Didiza said in an emailed response to questions. 

The IDC didn’t immediately respond to requests for comment outside of regular business hours. 

The Department of Trade, Industry and Competition is looking at options to retain the capacity to make long-steel products in the country should AMSA be unable to operate the plants, Sunday Times said, citing Tebogo Makube, the department’s acting deputy director-general of industrial development. 

The DTIC isn’t able to speak on the issue at “this critical stage” of negotiations and will likely release a statement when talks conclude, spokesman Bongani Lukhele said by email. 

The government provided AMSA R380 million to keep operations running and the Newcastle plant could operate for another year should more money come, the newspaper reported, citing Makube. 

AMSA has applied to the Unemployment Insurance Fund for money to partly cover the salaries of the 3,500 affected workers, Sunday Times said, adding this would cost about R2 billion.

The IDC provided the steel producer with R1.2 billion of working capital last month, the newspaper said, citing Tshepo Ramodibe, the lender’s head of corporate affairs.