In a seismic announcement made in November 2023, ArcelorMittal SA declared its intention to shut down its plants producing long steel products by the end of January 2024. This decision has triggered a wave of concern and discontent among manufacturers heavily reliant on specific steel grades, raising fears of a potential crisis in South Africa’s manufacturing sector.
The International Steel Fabricators of SA (ISF) and businesses in the downstream steel industry have voiced their apprehensions, pointing fingers at government policies that seemingly favor smaller steel mills engaged in remelting scrap metal to produce steel. The fear is that this preference for smaller players may compromise the quality and safety of steel products, especially in critical applications.
Neels van Niekerk, the CEO of ISF, has subtly expressed concern about the quality of steel from smaller electric furnaces. He suggests that while suitable for household applications like burglar bars and fences, this steel may not meet the stringent safety standards required in critical industries such as construction, automotive, and mining.
Van Niekerk emphasizes the safety-critical nature of automotive steel components, asserting that any alterations to the composition or supply chain demand extensive testing, a process that takes more than a year. The impending closure of ArcelorMittal’s Newcastle and Vereeniging plants, which produce crucial long steel products, could disrupt the automotive industry and potentially lead to increased imports of finished goods.
He warns of a domino effect that could include a surge in imported goods to substitute locally manufactured products. Industries heavily reliant on ArcelorMittal’s long-product steel input, including construction, automotive, mining, electro-technical, electricity transmission, aero and defense, rail, wire, fasteners, concrete reinforcing, cladding, roofing, and rail, face an imminent threat.
Van Niekerk predicts that the closure of ArcelorMittal’s plants could result in immediate industry shutdowns and production stoppages across various sub-industries. With ArcelorMittal being the sole local producer capable of supplying the bulk of required long-product steel input, the impact on these industries could be profound, creating a ripple effect across the entire manufacturing landscape.
As stakeholders grapple with the consequences of these closures, urgent dialogue and intervention are essential to mitigate potential disruptions, safeguard industries, and ensure the sustained growth of the manufacturing sector in South Africa.
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