Government Mulling R500m Bailout For Major Steelmaker In Sa: Report

The government is considering a R500 million bailout for ArcelorMittal South Africa AMSA as part of efforts to stave off closure of its Longs Business, Bloomberg reported on Tuesday 18 March.

In January, the major steelmaker announced a decision to wind down the Longs Business which could affect up to 3,500 jobs after a retrenchment process.

It cited weak economic growth, high logistics and energy costs, and an influx of low-cost steel imports, particularly from China, as the main reasons.

The announcement sparked government efforts to avoid the potential job losses. However, in a further update in late February, the company said continued policy inaction from the government had forced it to implement a final wind down.

It is envisaged that the shutdown of the blast furnace will commence in the first week of March with the last steel from the Longs Business produced by late-March/early-April 2025. The final wind down into care and maintenance should be fully implemented in Q2 2025, it said.

AMSA and the government, through the Department of Trade, Industry and Competition DTIC, are now reportedly close to finalising a deal to save the Longs Business.

Bloomberg cited anonymous sources who said the government could provide an initial support of around R500 million to pay the companys steelworkers over a period of six to eight months.

State-owned Industrial Development Corporation IDC could also provide AMSA additional bridge financing in return for raising its stake in the company from the current 8 percent.

Additionally, the government reportedly hopes to convince AMSA to consider offers for the two mills it plans to shut. They are located Vereeniging, Gauteng, and Newcastle, KwaZulu-Natal.

President Cyril Ramaphosa met Lakshmi Mittal , ArcelorMittals executive chairman, in Davos, Switzerland, in January.