South Africa - Johannesburg - 06 February 2020 - CEO of ArcelorMittal South Africa Kobus Verster presents the companies results for year ended December 2019 at the JSE Auditorium, Sandton. Picture: Karen Sandison/African News Agency(ANA)
THE Department of Trade, Industry and Competition (dtic) has defended itself against an allegation that it failed to act to prevent the downscaling of ArcelorMittal’s steel plant in Newcastle, stating that the intervention to avert the closure was deemed insufficient.
The department said that its efforts were not enough to save the thousands of jobs that will now be lost as a result of ArcelorMittal South Africa (Amsa) plant's downscaling.
Members of the Newcastle Growth Coalition said in a statement that they were extremely concerned about the impact this will have on numerous jobs, contractors’ livelihoods, and the general economy of the town, as ArcelorMittal is a major employer.
In a statement, ministerial spokesperson Yamkela Fanisi said: “The minister notes with concern the notification by ArcelorMittal SA of the imminent closure of the Newcastle longs steel plant. This will definitely have an economic impact not only in the town of Newcastle but also on the KZN economy and other downstream sectors. The government tried to intervene and salvage the situation, but that was not sufficient."
The Mercury reached out to the department to clarify the intervention it had put in place but had not heard back at the time of publication.
The dtic said the steel industry is a critical component in the re-industrialisation of the economy.
It said efforts will continue to find solutions that will be beneficial to the economy, focusing on improving productivity, investments, technological advancements, cost of production, and decarbonisation of the steel industry and the economy at large.
The Newcastle Business Chamber and the Association of SA Chambers said the winding down of the long steel business will have a devastating impact on the provincial economy.
Morne Seaman, president of the Newcastle Business Chamber, said in 1969, the government announced the establishment of the third Iscor Works in Newcastle (which is now Amsa).
“As a direct result of Iscor’s presence, Newcastle rapidly developed into an industrial town and became a key growth point in northern Natal. In Newcastle, almost anyone on the streets has either worked for Amsa or knows someone who has,” he said, adding that the impact on Amsa employees will be the most profound.
“The prolonged uncertainty surrounding the potential closure of Amsa Newcastle must have taken a tremendous toll on the employees and their families. With unemployment already at a high level, many long-serving employees will face significant challenges in finding new employment,” said Seaman.
Seaman said the closure of Amsa Newcastle will have a significant impact on both livelihoods and businesses in Newcastle and surrounding areas.
“We hope this development will serve as a catalyst for open and constructive dialogue between businesses, the Newcastle local municipality and the provincial government. As the Newcastle Business Chamber, we stand ready to facilitate these essential conversations.”
Melanie Veness, chairperson of the Association of South African Chambers, said the winding down of Amsa’s long steel business in Newcastle and Vereeniging, was devastating for the towns concerned.
“We had hoped that with strong government policy intervention, the closure of the division could be averted, but it appears as if the requested interventions failed to fully materialise as anticipated. South Africans deserve to be told why this is the case and why not enough was done to save these jobs,” Veness said.
KwaZulu-Natal MEC for Economic Development, Tourism and Environmental Affairs (Edtea) Musa Zondi said he has written to the Minister of Trade, Industry and Competition, Parks Tau, requesting further engagement to address the impending crisis.
“The closure will directly affect over 2 000 jobs in Newcastle, posing a severe threat to the livelihoods of workers and the broader local economy. As one of the largest employers in the region, Amsa’s operations have long been a pillar of economic stability, supporting thousands of workers and local suppliers.”
Amsa’s request for assistance from the government centred around key issues, including:
– A 15% reduction in Eskom tariffs and relief from load shedding.
– Reliable and cost-effective steel transportation from Transnet.
– Addressing fair competition and business practices.
– Reviewing industry policies such as the Scrap Price Preference System (PPS) and Export Scrap Tax.
Zondi acknowledged the establishment of a national task team, chaired by Dr Tebogo Makube, and the efforts led by Sisanda Mtwazi to facilitate dialogue between Amsa and the government. However, he expressed concern that the support provided has been insufficient to avert the closure.
“The closure of Amsa’s Newcastle and Vereeniging operations could devastate the local economy, leaving thousands without work and negatively impacting regional suppliers. Furthermore, if this is not resolved, it will have a ripple effect on the broader economy of KwaZulu-Natal, threatening economic stability and growth in the province. We urge the Minister to explore all possible solutions to prevent this closure, including further dialogue with Amsa and stakeholders,” said Zondi.
He said the department remains committed to preserving jobs and protecting the economic interests of the Newcastle community.
The MK Party also weighed in on the matter and urged progressive forces and trade unions to unite in opposition to ArcelorMittal’s decision and to advocate for policies that protect South Africa’s strategic industries.
It called on Parliament’s Portfolio Committees on Transport and Trade, Industry, and Competition to urgently intervene.
Cape Times