ArcelorMittal South Africa (AMSA) is bracing for substantial financial losses in its 2024 fiscal year as the domestic steel industry continues to struggle with economic and operational challenges. In a trading update released on 3 February, the company informed stakeholders that its financial performance has deteriorated significantly, expecting a deepening of losses for the year ending 31 December 2024. AMSA projects its loss per share to increase by between 46% and 52%, while its headline loss per share is expected to rise by an alarming 165% to 174%.

Earlier in the year, the company had already hinted at these financial struggles as a key reason behind its decision to shut down its longs business in South Africa. The initial discussions regarding the closure began in November 2023, when AMSA announced plans to place its longs division under care and maintenance. The decision stemmed from a combination of persistent economic downturns, logistical and energy constraints, and unsustainable competition from cheaper imported steel. However, the move sparked widespread concerns among stakeholders, who feared the loss of high-quality local steel production and the devastating socioeconomic impact on Newcastle and surrounding communities.

In response to these concerns, AMSA engaged extensively with the government to explore potential alternatives to keep the longs business operational. In August 2023, the company reiterated its commitment to preserving 3,500 direct jobs and an additional 80,000 jobs throughout the steel value chain. AMSA had noted some positive indicators in the manufacturing sector, providing a glimmer of hope for a potential turnaround. However, in early January 2024, the company reported that the initial signs of recovery in global steel prices were short-lived. Despite implementing aggressive cost-cutting and cash management strategies, the financial outlook for the fourth quarter of 2024 remained bleak, making it increasingly difficult to sustain operations.

With the financial strain worsening, AMSA confirmed that delaying a decision any further would jeopardize the overall sustainability of the company. The board and management emphasized their fiduciary and legal responsibilities to maintain the long-term viability of the business, ultimately concluding that the wind-down of the longs division was unavoidable. The closure of AMSA’s longs business will have severe consequences for South Africa’s steel industry, given that ArcelorMittal is the largest steel producer on the African continent.

This shutdown is expected to lead to significant job losses, with approximately 3,500 direct and indirect jobs at risk. Industry experts warn that the repercussions could be even more extensive. One steel executive cautioned that up to 100,000 jobs could be threatened in the medium term due to disruptions in supply chains. With AMSA producing roughly 450,000 tonnes of specialized steel—unique to its facilities and not manufactured by other local mills—companies relying on these materials may face significant operational challenges.

The impact of this closure will extend beyond the steel sector, affecting industries such as mining and automotive manufacturing, where AMSA is the sole producer of high-tech steel products. Without a stable local supply, businesses may struggle to maintain production, leading to further economic fallout. The long-term risk is that companies requiring specialized steel may relocate their operations elsewhere if the domestic supply becomes unreliable.

AMSA is set to release its full 2024 annual results on 6 February 2025, which will provide further insights into the company’s financial standing and the broader implications of its decision.