ArcelorMittal South Africa - one of the biggest employers in Newcastle in KwaZulu-Natal – announced the winding down of its long steel operations on Tuesday which affects both its Newcastle Works and Vereeniging Works.
The company said it would be initiating a section 189 process in terms of the Labour Relations Act that would potentially affect 3 500 jobs. Section 189 sets out the legal requirements for retrenchments for companies.
ArcelorMittal SA said the country’s apparent steel consumption (ASC) has decreased by 20% in the past seven years.
Ferdie Alberts, representative of the Newcastle Chamber of Business, said that ArcelorMittal SA was one of the biggest employers in Newcastle.
“We are going to have a whole lot of people relocating if this section 189 happens. It’s going to be a huge loss of income. It’s not just 3 000 jobs, it’s 10 000 or 20 000 people who will be affected by the loss of a breadwinner.”
Alberts said there had not been enough developments in South Africa and that is why there was a decline in the use of steel.
“There is too much reliance on the import of steel and not enough projects for local steel companies produced by the government. This is why we see a decline in steel consumption and the situation we are facing with thousands of job losses.”
Melanie Veness, chairperson of the Association of South African Chambers, said that news of the winding down of ArcelorMittal’s long steel business, potentially affecting 3 500 jobs in Newcastle and Vereeniging, was devastating for both the towns and South Africa.
“It makes me sad to have to say it, but quite honestly, business closures should not come as a huge surprise to anyone, given the unfavourable environment in which business is forced to operate currently.
“You cannot make conditions impossible to trade in and then be surprised when businesses fail.”
Veness added that the rate at which electricity prices have escalated over the past 10 years, coupled with the calamitous impact of load shedding, a failing logistics system and poor economic growth was a recipe for economic disaster.
“We have reached the end of the road, there’ll be more business casualties if the government doesn’t let the private sector in now to fix Eskom and Transnet, and if our leadership don’t address safety and security issues, as well as service delivery failures at a local level, and rethink some of their anti-growth policies.”
David van Wyk, lead researcher at the Bench Marks Foundation, a non-profit, faith-based organisation which has done extensive research on the mining industry, said that it was tragic that more than 3 000 jobs could be lost.
“The mining industry has lost thousands of jobs in the last few months and now potentially 3 000 more jobs could be lost. The steel industry has declined in South Africa and our economy is bleeding jobs at the moment.”
Van Wyk added that rail infrastructure has collapsed and that was one of the reasons why there has been a decrease in steel consumption.
“The issue is that rail transport is almost non-existent and trucks can’t take the same volume of steel that rail would normally transport.
“The fact is that the collapse of rail infrastructure has had a direct impact on the mineral and energy sector and resulted in a major loss of jobs.”