STEELING FOR MASSIVE JOB LOSSES
- O&A Team
- September 1, 2025
- Business
- AMSA closure, Arcelor Mittal Newcastle, Job losses in South Africa, South African steel sector
- 0 Comments
031 business
Our editor, Shirley le Guern shares a thought leadership piece about current upheavals in South Africa’s steel sector following the third announced closure of South Africa’s last steel mill
Let’s call it an own goal – and in this instance third time (un)lucky.
The final wind down of the long steel business by ArcelorMittal South Africa (AMSA) is now inevitable by the end of this month. Closure has been deferred twice already, and it now seems unlikely that any agreement will be reached to save South Africa’s last steel mill. In fact, the only new information to emerge is that a further 500 jobs are likely to be added.
This is certainly a deep blow to any faith in future industrial policy or the so-called Government of National Unity’s (GNU’s) ability to stem the rot that inevitably comes from decades of absent or misdirected industrial policy.
As an interviewee explained to me not so long ago – we export iron ore by the shipload and re-import it as Hyundais. I initially mistook it as a misguided attempt to inject some humour into a very technical discussion. Looking back, I must credit him with a somewhat cynical synopsis of the epic failure of empowerment, beneficiation and industrialisation.
Add to this the fact that Ford has announced the probable retrenchment of 474 workers as it and other original equipment manufacturers struggle to compete with imports of readymade up vehicles. With an added blow to competitiveness and localisation with the demise of AMSA, you have a potential job bloodbath.
Ironically, one of South Africa’s most infamous politicians and government ministers, Malusi Gigaba, suggested that the privatisation of Iscor and sale of assets to Arcelor Mittal and others could unravel into a grave mistake way back in 2011. At the end of the eighties, the pockets of government and investors were lined with more than R3,7 billion. Today, hundreds of thousands of people face hunger, poverty and hopelessness.
We’ve all read the pitiful figures envisaged for this latest closure – 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 communities in Newcastle and Vereeniging.
But, for the Steel and Engineering Industries Federation of South Africa (SEFSA), these numbers are conservative. Taking into account the 3500 employees that will be directly affected by the plant closures, projecting the 2.9% (CAGR) rate of decline across the entire steel and engineering sectors employment and applying the steel sector employment multiplier, on a five-year horizon, SEIFSA estimates the employment losses could amount to a staggering 293 754 both directly and indirectly, a figure that it says South Africa, given its already untenable unemployment rate, can ill-afford.
Where are trade unions when we need them?
In January, the South African Federation of Trade Unions (SAFTU) unequivocally condemned AMSA’s decision to shut down operations. It described the closure as a “catastrophic blow to workers, their families, and the broader value chains that rely on steel production” and called out governments both past and present on what has become “the systematic erosion of South Africa’s industrial and economic sovereignty.”
Although, two months ago, SAFTU declared that it stood in solidarity with the affected workers and communities and would fight to ensure that the country’s industrial future is not sacrificed for short-term profits”, it and most political parties remain ominously silent about what AMSA is claiming is an inability to reach agreement on key issues.
In effect, AMSA is claiming the moral high ground. Without knowing what goes on behind closed steel mill doors, it is impossible to determine if this is warranted.
Admittedly, it is impossible to turn a large ship on a dime and a few months was never going to be enough time to right the wrongs of state-owned enterprises like Eskom (high energy costs) and Transnet which is credited with the port and rail inefficiencies that are undermining this business and others.
What is missing is any accountability. When multinational investors like Arcelor Mittal purchased Iscor mills such as those in Newcastle and Saldanha, there should have been a commitment to invest and run them well. They should be held responsible as caretakers of South African employees not to mention key national assets.
Even talk of the proposed Steel Industry Masterplan that was being forged by seemingly intelligent government advisors and academics seems to have stalled. Documents such as this inevitably promise unprecedented economic growth and job creation but this latest AMSA failure suggests that there may not be a steel industry to reform anyway.
Strange but true, no-one has even gone back and checked whether any inflated targets outlined in government policies have ever been met.
Now, we have a Textile Industry Masterplan but no textile mills. We have a Motor Industry Masterplan – but the very real threat that none of its targets can be met without a ready supply of locally produced steel not to mention a tariff tsunami from the US. I could go on.
Why should we feel the steel industry’s pain?
A bigger question, though, is why this tragic closure should impact on every other South African out there trying to make ends meet.
The answer is that, as more and more industries die, it is going to become increasingly difficult not only for ordinary South Africans but for government to make any ends meet. Job losses and company closures are the reason our economy is unlikely to top 1% growth this year. A shrinking tax base means government remains broke because of its own failed policies and poor decisions – and that’s without the standard corruption rhetoric.
Which brings us back to the topic of own goals.
GDP is shrinking and will continue to without the steel sectors estimated 1.9% contribution – not to mention less input from related industries such as mining, construction and motor manufacturing which together currently account for an estimated R600-billion.
At the end of the day, while the consequences remain complex, the outcome comes down to pretty simple arithmetic. The 80 000 people who stand to be retrenched as a result of this latest AMSA closure will not be spending at retailers or paying taxes. South Africa will become an import driven economy with the few trying to sell substandard imports to many poverty-stricken consumers.
Those that should be standing to benefit from government’s long promised but never delivered infrastructure roll out plan will go home hungry. The reality is that the steel needed for large multi-billion-rand infrastructure projects by the likes of Eskom, Transnet and SANRAL will, in all likelihood, be made in countries where workers will return home to food on the table.
Meanwhile, we are creating ghost towns. As the blast furnaces shutdown this month and the last steel comes off the production line, the livelihood of the small town of Newcastle hangs in the balance.
Again, this is not a first for KwaZulu-Natal – Mooi River degenerated with the closure of Mooi River Textiles whilst in July 2019, the liquidation of Masonite which was one of the southern hemisphere’s largest hardboard manufacturers and the largest employer in the town, left Estcourt in disarray.
This latest failure will see many work seekers head to larger cities like Durban and Johannesburg where infrastructure is failing and cannot provide ever growing populations with basics like water and power. These costs land at the feet of a dwindling base of ratepayers with an inevitable escalation in urban decay.
One can only ask what the impact on next year’s local government elections will be.
The final irony is that AMSA, too, is not answering for its lack of investment in the longs steel business that it bought out of Iscor. We are told that a sale is not being entertained. Instead, the final wind down into care and maintenance will be fully implemented by the end of September.
But one has to ask what good care and maintenance will do? The sister steel mill in Saldanha which was carefully mothballed by AMSA with the loss of more than 1 000 jobs in 2020 remains silent with little hope of rejuvenation any time soon. Are we waiting for a day that will never come?
