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ACL - Update: Final wind down decision relating to the Long Steel Business
ArcelorMittal South Africa Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1989/002164/06)
Share Code: ACL
ISIN: ZAE000134961
("ArcelorMittal South Africa" or the "Company")
UPDATE: FINAL WIND DOWN DECISION RELATING TO THE LONG STEEL BUSINESS
("LONGS BUSINESS")
On the 6 February 2025 shareholders were informed that the commencement of the Longs
Business wind down implementation plan, which was initially scheduled to start by end-
January 2025, had been delayed by approximately one month to enable:
• Fulfilment of the higher-than-anticipated outstanding order book, prioritising
automotive and seamless tube customers; and
• Continuing discussions with the South African Government on the future of the Longs
Business with an announcement expected in the second half of February 2025.
Since then, there has been extensive ongoing engagement with Government and certain
stakeholders to find solutions to avoid the wind down of the Longs Business and ArcelorMittal
South Africa acknowledges Government's engagement during this process.
Regrettably the parties have not been able to find timely solutions required to defer the wind
down of Longs Business. In particular, the progress with the identified priorities is as follows:
Scrap advantage over iron ore: The scrap export tax has not been removed and the
Preferential Pricing System, allowing steel producers using Electric Arc Furnaces a substantial
unfair advantage remains in place, despite evidence from an independent Econometrix study(1)
on the damaging impact of the scrap Price Preference System and export tax.
Port and rail efficiency: There has been no further progress regarding these matters. Transnet
has declined to negotiate improved tariffs.
Reduction in energy prices: A further application was made for a negotiated pricing
agreement in terms of the current policy. This application has not been supported by Eskom and
no progress has been made in this regard.
Implementing trade measures: Duties have not been implemented as anticipated and the
provisional safeguard on Hot Rolled Coil (HRC) has been allowed to lapse.
The structural elements leading to the wind down of the Longs Steel Business remain
unaddressed despite extensive discussions. Since early 2024 when negotiations began, these
conditions have not merely remained static but have worsened. The situation has deteriorated
significantly since our discussions began.
Electricity costs are set to increase by 12.74% from 1 April 2025, further undermining our
competitive position at a time when energy costs are already prohibitive. Concurrently,
Transnet has announced proposed rate increases across its service portfolio, which would
further elevate logistics costs that are already uncompetitive by international standards. On the
regulatory front, the crucial safeguards on Hot Rolled Coil have been allowed to lapse , leaving
the industry vulnerable to intensified import competition without adequate protection. Despite
our repeated submissions of evidence demonstrating the adverse impacts of current policies,
we have received no formal communication from either the dtic or National Treasury regarding
the removal of the export tax or review of the Price Preference System. This continued policy
inaction, combined with deteriorating cost structures, has accelerated the decline in operating
conditions beyond what was initially assessed earlier this year.
Accordingly, the Board and Management hereby notify shareholders that the Company has no
option but to implement the final wind down of the Longs Business. It is envisaged that the
shutdown of the blast furnaces will commence in the first week of March, with the last steel
produced in late-March / early-April 2025. The final wind down into care and maintenance will
be fully implemented in Q2 2025.
The Company is disappointed that all our efforts over the last year have not translated into a
sustainable solution. We were unable to avoid what will be a significant negative impact on the
economy, the loss of approximately 3,500 direct and indirect jobs and potentially significantly
more throughout the value chain (at an estimated 80,000 jobs and small businesses), and a
detrimental impact on the local community in Newcastle.
As previously advised, as difficult as these decisions are, it will allow the Flats Business
to be better positioned to achieve sustainability.
(1) Econometrix (2025) https://www.econometrix.co.za
Vanderbijlpark
28 February 2025
For further information please contact:
Tami Didiza: Manager: Corporate Communications
Tel: (016) 889 2549/ (016) 889 4100
Company Secretary
FluidRock Co Sec (Pty) Ltd
Tel: (016) 889 4077
Sponsor to ArcelorMittal South Africa Limited
Absa Bank Limited (acting through its Corporate and Investment Banking division)
Date: 28-02-2025 11:00:00
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