ArcelorMittal to save 80,000 jobs amidst South African ‘green shoots’ 

Despite weaker half-year results, ArcelorMittal South Africa remains steadfast in its plans to save 3,500 direct jobs and 80,000 more across the value chain as it sees green shoots appearing in the country’s economy.

ArcelorMittal South Africa released its results for the six months through June 2024 today, which revealed a mixed bag of results for one of the largest steelmakers in the world.

It reported an EBITDA loss of R221 million for the half-year, which is an improvement against the R443 million loss recorded in the second half of 2023 but a decline from the R499 million profit recorded in the first half of 2023.

However, the company’s fixed costs of R3.43 billion were R132 million lower despite inflationary pressures.

In addition, the company said blast furnace chilled hearth conditions at Vanderbijlpark in April and May resulted in a R716 million negative volume and cost impact within EBITDA against its business plan.

Sales volumes were also down 2% to 1.2 million tonnes, with crude steel production down 10% to 1.2 million tonnes.

This was compounded by the fact that realised rand steel prices were down 3% and down 6% in dollar terms.

However, the raw material basket was up 3% in rand terms, although the international basket decreased 1% in rand terms.

ArcelorMittal South Africa reported a headline loss of R1.11 billion, compared to a loss of R1.44 billion in the preceding six months and a loss of R448 million in the first half of 2023.

It reported net borrowings of R3.79 billion, up from R3.22 billion at 31 December 2023 and R2.99 billion at 30 June 2023.

“Work continues on advancing the high payback projects portfolio along with a funding solution which will also seek to address balance sheet resilience,” the company said.

Despite these poor results, ArcelorMittal South Africa said it will continue to operate its long steel products business after announcing last year that it would shut this business down.

The company said it would continue to operate this business “to allow an opportunity for the short, medium- and longer-term initiatives aimed at securing the business’s sustainability to be fully explored”. 

Last year, ArcelorMittal announced its plans to shut its long steel products business and cut as many as 3,500 jobs, citing the country’s moribund economy. 

However, in February this year, the steel producer advised shareholders that the board and management had decided to defer the winding down of its Longs Business, enabling it to continue operating for up to six months.

This was done to allow time to progress, conclude and secure identified short-term interventions while progressing the development of additional medium- and longer-term interventions focused on business sustainability.

“The Longs Business remains fully operational with all its facilities continuing to operate and ably servicing its markets and customers,” the company said in early July.

It said that, despite the overall weak market and difficult trading conditions, it has been pleasing to see some ‘green shoots’ within the manufacturing sector. 

For example, manufacturing production increased by 5.3% year-on-year in April and by 5.2% month-on-month in April compared with March. 

“This marks the largest monthly increase since August 2021. The absence of load-shedding, depending on its sustainability, should further contribute to the improvement,” the company said. 

The latest manufacturing growth forecast for 2024 at the time was an increase of 1.1% year-on-year.

“The increase in power generation in recent months, coupled with the renewable energy projects scheduled to come on stream over the next two years, suggests that the drag on economic growth caused by the electricity shortage should gradually diminish, facilitating structurally higher production levels,” the company said.

“A key focus for ArcelorMittal South Africa is the upgrade and expansion of the national logistics infrastructure and the electrical supply grid, including new renewable energy capacity.”

These green shoots have allowed ArcelorMittal’s Longs Business to continue to operate, saving 3,500 direct jobs and some 80,000 more across the value chain.

The company said its management is committed to working closely with all customers, suppliers and stakeholders to ensure the sustainability of long steel products supply in the Southern African region.