The Department of Trade, Industry and Competition (DTIC) has received expressions of interest from two parties that may want to buy the Saldanha Steelworks from ArcelorMittal South Africa (AMSA).
AMSA last month announced that it would close Saldanha Steel following an operational review of its asset footprint.
Trade and Industry Minister Ebrahim Patel has urged AMSA to continue working with government and other social partners to reverse this decision and find solutions that would keep Saldanha Steel in operation and its workers in employment.
“If no solution is found with ArcelorMittal, they should consider selling the plant to ensure the country does not lose industrial capacity and workers, and to ensure that communities are not displaced,” Patel said.
The Ministry subsequently met with AMSA’s management to request the company to review its decision. The Ministry advised that potential buyers were considering making a bid for the steel plant and requested that AMSA consider every effort to retain employment in Saldanha, including giving consideration to potential bids by other investors.
“We are encouraged by these early expressions of interest in Saldanha Steel. If AMSA is still intent on closing Saldanha Steel, a decision we do not agree with, then nonetheless we urge the company to engage actively and openly with potential buyers and to offer them terms that would enable operations at the steel mill and employment opportunities to the local community.
“Saldanha Steel plays an important role in South Africa’s industrial footprint. For the Saldanha region specifically, the steel works is an important source of employment and development as well,” Patel said.
He indicated that the steel producer’s decision to place Saldanha on care and maintenance and retrench almost 1 000 workers comes despite considerable efforts by government to provide support to AMSA to prevent job losses across the company’s operations, including Saldanha Steel.
Patel informed that the DTIC, together with the Department of Public Enterprises, power utility Eskom and freight utility Transnet, had engaged with AMSA management on support which could be provided to reduce energy and logistics costs for the company and at Saldanha, in particular.
He indicated that government had facilitated engagements with iron-ore and coal producers, as well as organised labour, to come up with solutions to reduce costs to avert job losses.
“The combined support package, offered by government ranged from concessions on iron-ore pricing, electricity, water and rail tariffs, providing considerable cost savings. AMSA has asked for support, however, in excess of what was made available through the efforts of government.”
Patel also noted government’s support of AMSA, with tariff protection from imports including safeguard duties and the designation of steel for state infrastructure projects.
Further, he said that to support the entire steel and metals value chain, government brokered a pricing agreement for upstream steel mills to remain sustainable in the domestic market and to provide a competitive fair price for the downstream industry.
Patel also indicated that the African Continental Free Trade Area, which will come into effect in July 2020, is expected to open up additional demand for primary steel across the continent.
“We have embarked on the process to develop a master plan for the steel and metals value chain in South Africa which will include both demand- and supply-side measures, and bring greater competitiveness and dynamism to the entire steel and metals industry.
“A number of initiatives are in progress to foster greater demand for steel by both the public and private sectors, and to improve the cost base across the industry,” Patel said.
Meanwhile, Solidarity has urged AMSA to save jobs by selling the plant.
“Solidarity is strongly opposed to the closure of this plant. All possibilities to save this plant must be investigated and its closure should be prevented at all costs,” said Solidarity Metal and Engineering Industry Deputy General Secretary Willie Venter.
“The extent of the planned job losses at Amsa will be a catastrophe, not only for the employees and contractors working at the plant, but also for their families and the greater community. The impact will be enormous, and it will have a negative impact on the broader economy of the Western Cape,” Venter argued.
Solidarity warned that if Amsa cannot find a solution to keep the plant in operation, Amsa should seriously consider the offer to sell. “Everything possible must to be done to ensure job security and sustainable income,” Venter concluded.