Primary steel producer ArcelorMittal South Africa’s (AMSA’s) share price on the JSE fell by 10.4% on Wednesday morning after it said it could possibly cut more than 2 000 jobs.
In a trading update for the six months ended June 30, it said a difficult domestic economic environment was negatively impacting on the local steel industry. This was exacerbated by certain costs, including higher electricity, rail and port tariffs and higher primary raw materials costs, that were not within AMSA’s control.
AMSA has, therefore, embarked on initiatives to improve efficiencies and cut costs that are within its control, but these have been insufficient, resulting in the need to review staffing levels, besides other possible interventions.
The steel producer has started a Section 189(3) consultation process with labour unions.
The exact number of jobs to be cut would only be confirmed once a formal consultation process was completed.
AMSA, which will publish its interim results on August 1, has also advised shareholders that its headline earnings for the period are likely to decrease by at least R650-million, or 59c apiece, to a headline loss.
Its loss for the period is, however, expected to narrow by R700-million, or 64c a share. This compares with the R1.6-billion loss reported for the first half of 2018.