ArcelorMittal South Africa Ltd. is closing its steel production business, and this will potentially result in the loss of up to 3,500 jobs in South Africa.
According to Bloomberg, this move comes amid a 20% reduction in South African steel consumption over the last seven years, highlighting the issues confronting the Africa’s third-largest economy.
Kobus Verster, Chief Executive Officer of ArcelorMittal South Africa, stressed that job cuts were a last resort after all other options had been exhausted. As he put it, “we must ensure that the business remains sustainable in the long term, in the interests of the company and its stakeholders.”
South Africa’s economic challenges are aggravated by ongoing problems in its power and transportation infrastructure, with regular power outages and logistical bottlenecks hindering efforts to revitalize industrial sectors.
Steel consumption, which is generally regarded as a barometer of economic health, has had a negative impact on the construction industry, considering the major usage of long steel items in building infrastructure.
Significant job cuts present another difficulty for President Cyril Ramaphosa and the ruling African National Congress, who are already dealing with the country’s rising job losses. Notable corporations, including Anglo-American Plc and Sibanye Stillwater Ltd., have also resorted to layoffs, adding to larger economic concerns.
Additionally, ArcelorMittal is facing new challenges as a result of weak demand in Europe, and the business is slated to close its steel factories and mines in Kazakhstan following a catastrophic accident that killed 46 people.
ArcelorMittal fell 0.3% in Amsterdam trading, indicating yet another blow for the global steel titan. Lakshmi Mittal, an Indian billionaire, owns ArcelorMittal.
Mittal, who comes from a steel-making family, established his own path by breaking away from his siblings to found Mittal Steel. Mittal’s important merger took this entrepreneurial adventure to new heights.
Despite its successes, ArcelorMittal experienced hurdles in 2022, earning a net income of $9.3 billion, 38% lower than the previous year’s $15 billion. This drop was attributed to fewer steel supplies and disruptions caused by the Ukraine crisis.
In order to shift leadership dynamics, Mittal handed over the CEO post to his son, Aditya Mittal, in 2021, while retaining the prestigious title of executive chairman at ArcelorMittal.