ArcelorMittal shelves plan to close South African steel plant

ArcelorMittal's South African division said on Tuesday it had decided against shutting its steel plant that makes rolled bars and was working on a plan to make it viable, more than six months after it announced its closure.

In January, the world's number 2 steelmaker delayed the closure of the business by up to six months as it engaged government and labour to resolve issues impacting its profitability and to avert job losses.

"The board and management have decided that the longs (steel) business will continue to operate to allow an opportunity for the short, medium and longer-term initiatives aimed at securing its sustainability, to be fully explored," ArcelorMittal South Africa said in a trading update.

The plant, based in Newcastle in the KwaZulu-Natal province, makes fencing material, rail, rods and bars used in sectors such as construction, mining and manufacturing.

Announcing the planned closure last November, the steelmaker had blamed weak demand and persistent infrastructure problems in Africa's most advanced economy. It also bemoaned policies, which gave scrap metal an advantage over iron ore in steel production.

ArcelorMittal South Africa on Monday noted some improvements in electricity generation as well as port and rail efficiencies.

The non-renewal of a steel scrap export ban after it expired in December 2023 had also started to bring "greater fairness and equity into the input cost structures" between integrated steelmakers such as ArcelorMittal and scrap-based producers, the company said.

The company has also obtained a 1 billion rand ($54.29 million) working capital facility to support continued operations.

Although its long steel operations were stable during the six months to June 30, ArcelorMittal expects its losses to widen due to challenging trading conditions as well as disruptions at its Vanderbijlpark furnaces, where it produces flat steel products.

It expects to report a headline loss per share of between 0.96 rand and 1.04 rand during the half year, compared with a headline loss of 0.40 rand per share during the same period last year.