The most protected company in South Africa
Donald MacKay, the founder and CEO of XA Global Trade Advisors, said that ArcelorMittal South Africa is the most protected company in South Africa.
He added that this does not serve the country’s needs, as 90% of the employment in the steel industry is downstream.
MacKay shared this information during an interview with Alex Hogg on the Biznews Edge podcast.
ArcelorMittal South Africa (AMSA) is South Africa’s largest steel producer and one of the country’s biggest industrial employers.
However, the company has faced headwinds in recent years, including operational failures and increased competition from Chinese steel imports.
Weak infrastructure spending and stagnant economic growth have also reduced steel consumption in South Africa’s construction, mining, and manufacturing sectors.
The impact was seen in ArcelorMittal South Africa’s financial results for the six months ended 30 June 2026.
Crude steel production declined by 35%, revenue by 30%, and it reported an EBITDA (earnings before interest, taxes, depreciation, and amortisation) loss of R409 million.
The company’s headline loss was R1.49 billion; it had negative free cash of R1.2 billion, and its net borrowings increased to R7.9 billion.
These results, as bad as they were, followed what the company called progress in repositioning the business.
“Over the past 18 months, ArcelorMittal South Africa has fundamentally reshaped its operating model to improve sustainability and competitiveness,” it said.
The interventions included placing the longs business into care and maintenance, cutting fixed costs, and simplifying operations.
It added that the government’s efforts to strengthen trade protection measures and support localisation gained momentum in 2026.
“ArcelorMittal continues to engage with policymakers and industry stakeholders to improve the competitiveness and sustainability of the domestic steel industry,” it said.
ArcelorMittal South Africa enjoys strong protection
Despite increased protection for ArcelorMittal South Africa’s main production lines, the company still failed to keep its long products business open.
However, this is not the only problem. MacKay explained that other parts of the local steel industry suffer because of the protection.
“ArcelorMittal South Africa is the single most protected company in the country,” MacKay told Biznews.
He said it had received unprecedented trade protection from the government and the International Trade Administration Commission (ITAC).
“The company has layer upon layer of trade barriers piled on top of each other to safeguard it,” he said.
These protections include base customs tariffs, anti-dumping duties, and temporary safeguard measures.
These barriers, which protect ArcelorMittal South Africa from steel imports from China and Thailand, have downstream negative consequences.
MacKay explained that 90% of employment in South Africa’s steel industry is downstream, rather than with primary steel producers.
These downstream companies include fabricators, manufacturers, fence makers, and widget builders.
Protecting ArcelorMittal raises the cost of primary steel, which serves as a key raw material for downstream businesses.
Because these downstream fabricators have to pay higher prices for raw materials, their end products become too expensive.
The higher prices destroy their competitiveness in global export markets, which means that they lose business and cannot scale.
The high costs further force consumers and businesses downstream to delay replacements or purchases.
This, in turn, creates an operational and financial burden across the broader manufacturing and steel value chain.
ArcelorMittal South Africa can become government-controlled
The protection of ArcelorMittal South Africa is unlikely to change, especially with a new deal on the table.
Bloomberg reported that the Industrial Development Corporation (IDC) is looking to buy ArcelorMittal South Africa.
The IDC is South Africa’s largest development finance institution and is 100% owned and controlled by the South African government.
The IDC has reportedly reached an initial agreement with ArcelorMittal SA to take over the steel giant’s South African unit in a deal worth about R10 billion.
The offer includes a cash component of about R3 billion, and the financier will assume about R7 billion in debt accumulated by ArcelorMittal South Africa.
The transaction would mark one of the South African government’s biggest industrial interventions in years.
The deal would also effectively place a key industrial asset under the control of the state-owned Industrial Development Corporation.
The aim is to conclude the deal, which will be subject to a shareholder vote, by the end of the year.
