Shell pulls out of Namibia oil discovery
Ron Bousso
ArcelorMittal Long Steel closure sparks debate over industrial policy
10 Jan 2025
ArcelorMittal South Africa's (Amsa) decision to mothball its long-steel operations at Newcastle Works, Vereeniging Works, and its rail and structural subsidiary Amras has ignited fierce debate over South Africa's industrial policy, with industry bodies pointing to systemic failures in government support and protection measures. The closure, set to take effect at the end of January, will result in approximately 3,500 direct job losses, with industry experts warning of far more extensive damage to the broader economy.
The decision to sunset Long Steel has sparked debate in the steel industry. Source: ArcelorMittal
Seifsa federation president Elias Monage warns of devastating ripple effects throughout the sector.
"Some of the most alarming estimates over and above the reported 3,500 direct jobs on the line are the medium-term impact of second round effects in the order of 20,000 to 25,000 jobs and in the longer-term multiples of more than this," says Monage.
He noted in a statement shared with Bizcommunity that the impact will extend beyond immediate job losses, affecting "the auto, motor, construction and mining sub-sector of the economy and all who work in it."
The closure has exposed deep divisions in perspectives on industrial policy.
Government failure
Neasa chief Gerhard Papenfus argues that the shutdown demonstrates the fundamental failure of protectionist policies.
"If there is one thing that Amsa's announcement of its imminent shutdown of its long steel business illustrates, it is the fact that protectionist duties cannot save any company from eventual demise,” says Papenfus
If a business is not competitive, the market will eventually spit it out.
In response the Department of Trade, Industry and Competition (DTIC) expressed "serious concern" about the announcement, restating its commitment to finding a "workable and lasting solution" with Amsa.
The department revealed that minister Parks Tau had established a technical working group in 2024, comprising stakeholders from various government departments, state-owned entities, and the private sector, which conducted regular engagements through December 2024.
Failed master plan
Monage points to the failure of the Steel Master Plan (SMP), which was intended to revitalise the sector.
Elias Monage
"The tragic reality is that the lofty goals set by the Steel Master Plan to charter a roadmap to re-energise the sector, expand production and increase demand across the steel and fabrication industry value chain and introduce an industrialisation programme have failed dismally."
The government's role in the crisis has come under particular scrutiny.
Amsa's year-long appeals for government assistance went unanswered, leading Monage to draw parallels with previous industry failures.
"Sadly we've seen this play out before with the closure and mothballing of Highveld Steel and Saldanha respectively, all at the feet of a dithering government too slow to react and offering too little too late."
Master plan was the problem
Papenfus, however, argues that government protection has been part of the problem rather than the solution.
"Government support of uncompetitive entities will always cause immediate harm to those not benefitting from the protection," he explains.
"The protection of this monopolistic antiquated steel mill resulted in severe prejudice to the steel downstream – Amsa's clients."
Looking forward, industry leaders agree on the urgent need for comprehensive reform.
A recent sectoral engagement with Tau in November 2024 highlighted several critical points, including the need for radical and ambitious interventions to prevent further de-industrialisation.
Steel at the centre of industry
Seifsa is calling for immediate action, with Monage saying that "steel still has the potential to be the core of the reindustrialisation programme for South Africa."
However, he stresses that this will require "leadership – a focused character and decisiveness – that up until now has been missing."
Papenfus offers a starker prediction for Amsa's future: "While it may only be Amsa's long steel business to be mothballed for now, the same fate will eventually befall its entire business.”
“There is no long-term prospect of them succeeding, unless they become competitive."
The debate continues over how to achieve a balance between market competitiveness and strategic industrial support while preventing further erosion of the country's industrial base.
