Multinational ArcelorMittal on Monday announced that it would close two South African steel manufacturing sites and a rail production plant, affecting some 3,500 jobs.
The decision involves key products used in construction and public works such as wires, beams, joists, concrete bars and railway tracks businesses.
“The Company has taken the decision to wind down the Longs Business” in South Africa, ArcelorMittal said in a statement.
The two steel plants to close are in the eastern cities of Newcastle and Vereeniging, south of Johannesburg. The AMRAS rail production subsidiary will also close.
“Newcastle’s coke-making operations will continue, though scaled back to reflect reduced demand,” ArcelorMittal added.
“It is envisaged that approximately 3,500 direct and indirect jobs will be affected.”
The company said low steel prices on international markets due to “record Chinese exports” was a major reason for the move.
“The weak domestic market for Long steel products, coupled with the overcapacity of local and international steel production, has left the business unsustainable.”
Production of long steel would probably cease by the end of January, the company said, however a spokesman contacted by AFP said other parts of ArcelorMittal’s business in South Africa would continue.
Long steel accounts for about a third of ArcelorMittal’s business in South Africa, compared to two-thirds for flat steel used in the automobile, aeronautics and household appliance industries.
South Africa’s National Union of Metalworkers said in a statement that “allowing these plants to close could be potentially catastrophic and it would spell disaster for manufacturing and industrialisation of our country”.