ARCELORMITTAL South Africa expects the shutting down of the Saldanha plant to be completed during the first quarter of 2020.     African News Agency (ANA)
ARCELORMITTAL South Africa expects the shutting down of the Saldanha plant to be completed during the first quarter of 2020. African News Agency (ANA)

SA needs to find itself 'a new niche’ following steel company shutdown

By Mwangi Githahu Time of article published Nov 12, 2019

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Cape Town - South Africa is going to have to rethink where its competitive edge lies following the announcement that the ArcelorMittal plant in Saldanha would be shut down.

ArcelorMittal’s South Africa unit said on Monday it would close its steel operations at Saldanha Works because it could no longer compete in export markets.

Two of the country's leading economists, speaking separately, both said that as a small player bedevilled by expensive and unreliable electricity supply and hefty competition in the world steel market, South Africa would be better off forgetting the steel industry and looking for a different niche.

Economist Dawie Roodt said: “The world is getting very competitive. We are a small player and to be in steel you have to be not just big, but very big. The closure of the plant is unfortunate, but it is a reality we must face. Also, Saldanha was not close to its export markets.”

The company announced in September that it could close some operations as part of a review aimed at strengthening long-term sustainability amid cheap imports, rising costs and a flagging local economy.

Rashana Damonse van Zest Werke, chairperson of the West Coast Business Chamber, said: “The closure did not come as a shock, but we still hope that the situation can be turned around. It is not just the 1 000 people employed by the firm, but if you imagine that on average each has a family of four, you can see what a catastrophe this is for Saldanha.”

Economist Mike Schussler said: “China makes 58% of the world’s steel; if you bring India, Japan and South Korea into the mix together, the Asian countries produce at least 85% of all the steel in the world.”

Finance and Economic Opportunities MEC David Maynier said: “We have urged the national government to assist the company by reducing electricity and freight costs, by exploring alternative energy sources, and by including the company in the Saldanha Bay Industrial Development Zone.

“However, in the end this does not appear to have been enough to save the company.”

Speaking on the sidelines of the BRICS trade ministers meeting in Brazil, Trade and Industry Minister Ebrahim Patel said: “The closure of Saldanha Works and retrenchment of workers at ArcelorMittal SA (Amsa) is a harsh blow to industrialisation in the country.”

“We recognise the challenges presented to the steel industry globally from over-capacity.

“Our efforts are directed at maintaining a primary steel production capability in South Africa. We urge Amsa to continue to work with national government and other social partners to reverse this decision and find solutions which can keep the Saldanha Works in operation, and workers in employment.

"If no solution is found with ArcelorMittal, they should consider selling the plant to ensure the country does not lose industrial capacity and workers and communities are not displaced.”


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Cape Argus

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