By: Creamer media

In a trading statement, the JSE-listed company reported that the IDC facility had been fully drawn down to enable the longs business to continue to operate and fund its working capital and associated financial needs to the end of September.

However, AMSA said insufficient progress had been made to date to address the structural impediments to the viability of its longs business, including the integrated Newcastle mill in KwaZulu-Natal.

These impediments were listed as including:

• the “structural distortion” created by the Preferential Pricing System and export tax on ferrous scrap in favour of scrap-based steelmakers;
• weak domestic demand, with AMSA’s sales volumes expected to be 10% lower in the first six months of 2025 compared with the same period last year and apparent steel demand and prices also lower;
• insufficient import protection and the continued circumvention of existing tariffs, which had resulted in a “flood” of imports, which supplied about 37% of local consumption during the period, and with especially strong import flows from China, Indonesia, and Vietnam;
• expensive and poor rail service performance, which had “deteriorated to its lowest levels ever” and had affected production at the longs unit, with AMSA also reporting that there had twice been a risk of uncontrolled blast furnace stops, owing to major rail interruptions linked to an unprecedented spate of cable theft and locomotive failures; and
• unaffordable and globally uncompetitive electricity tariffs.

Various strategic options were still being explored to salvage the longs business, including an IDC due diligence, but AMSA reiterated that it did not have “the ability to bear any further financial risk associated with its continued operations after the deferral period”.

“Therefore, unless a solution is implemented timeously, and to ensure the orderly closure of the longs business as soon as possible after the deferral period, ArcelorMittal South Africa may have no option but to take certain operational steps to prepare for the wind down process well in advance of 30 September 2025,” the company said.

The unit would continue trading until the end of September, but AMSA has stated previously that the technical wind down involves various steps that would have to be initiated weeks ahead of the actual shutdown.

A update would be provided on July 31 when AMSA released its interim results which would be slightly better than the headline loss of R1/share in the comparable period, with a loss of between R0.89 a share and R0.99 a share expected for the current period.