Residents of Newcastle have been dealt a blow after news emerged that the failure of a task team established for a survival strategy for ArcelorMittal South Africa’s (AMSA’S) Newcastle Works notified government on 21 December 2024 that it would shut the operation by the end of January2024.
The official announcement, which was made on 6 January 2025, has come after months of consultations with government failed to stave off the threat to thousands of jobs.
In an official statement AMSA said that despite good discussions, nothing concrete was put on the table and that the company will now transition the Longs Business into care and maintenance.
Amid persistently weak market conditions and competition from mini mills, AMSA reduced the operation of its blast furnace operations at the Newcastle Works to the lowest level technically possible in 2024, resulting in an asset utilisation in the longs business of only 50%.
The closure will also affect the Vereeniging Works in Gauteng, and the Arcelor Mittal Rail and Structural unit which is located at the old Highveld Steel facility in Mpumalanga.
Chief Executive Officer for AMSA , Kobus Vester expressed deep regret over the decision but said that it was made because the structural challenges facing the longs business could not be resolved as envisaged when the decision to wind-down in February 2024 was reversed.
These included weak economic growth, high logistics and energy costs and an influx of low-cost steel imports , particularly from China, where hot rolled coil and rebar prices retreated to below 500 Dollars per ton in the fourth quarter and from where exports rose to record levels.
The Newcastle Works which uses blast- furnace technology to convert iron-ore to steel, is also facing stiff competition from scrap-based steelmakers, whose competitiveness has been bolstered in recent years by a price preference (PPS) for scrap metal and an export tax on scrap.
The closure is expected to affect approximately 3500 direct and indirect jobs while the coke-making operations will continue, though scaled back to reflect reduced demand.
What are your thoughts in this closure and how do you think this will effect Newcastle as a whole? Leave us a comment!