File Image: IOL

CAPE TOWN - Angry labour unions are planning to oppose job cuts at ArcelorMittal South Africa (Amsa) which said on Tuesday that it would consult employees on probable retrenchments.  

Amsa announcement that it planned to retrench more than 50 employees as low demand, rising costs, a strong rand and South Africa’s sluggish economy necessitated further cost cutting measures.

An Amsa spokesperson said that the proposed restructuring would affect all operations. 

“At this stage we cannot say exactly how many people will be affected or which operations will be affected as the consultation process must first be concluded and all avoidance measures fully explored,” she said.

In the half year to June, Amsa reported that operating and headline losses, had increased by R714 million and R1.161 billion respectively, on the back of higher coking coal and iron ore costs, the strong rand  the continued weakening of the South African economy.

It also said that steel consumption was 3.8% lower in the first half as a result of subdued economic growth.

Trade union Solidarity said it would hold serious talks with Amsa to discuss alternatives so that retrenchments would be considered as the last resort.

“We will do everything we can to prevent possible retrenchments,” said Solidarity’s deputy general secretary in the metal and engineering sector, Marius Croucamp. 

Croucamp confirmed that the union had received a Section 189 notification in terms of the law of its restructuring plans which would affect jobs, describing the restructuring as a major blow for employment in Newcastle, Saldanha  and the Vaal Triangle.

The planned retrenchments come in the wake of government imposing tariffs on imported steel to protect the local industry.

However, Amsa chief executive Wim De Klerk last month said that despite duties and the designation of steel local steel for government infrastructure projects, half a million tons had been imported in the first half of the year. 

On Tuesday, De Klerk said that  measures to improve business performance had not yielded results and Amsa would  focus on the costs that were within control in the face of the extremely challenging trading environment.

He said the restructuring plans would include including selling of non-core assets and improve procurement savings to help to turn the company around.

De Klerk said did not believe that the outlook was likely to change in the foreseeable future, especially with regards to the lack of investment in infrastructure development.

The National Union of Metalworkers of South Africa (Numsa) also confirmed that it had been informed about the restructuring process.

The union said it planned to scrutinize the company’s books and financials in order to explore alternatives.

General secretary Irvin Jim said: “I can promise you and workers we are  going to do everything our power not to run away from engagement but to fight and oppose any form of job losses at Amsa”.

-BUSINESS REPORT