Historical Significance of South Africa’s Steel Mills
Established in 1928 as the state-owned Iron and Steel Corporation, these steel mills played a pivotal role in South Africa’s industrialization during the apartheid era. By the 1940s, they had become instrumental in the nation’s post-war reconstruction efforts, contributing significantly to the development of infrastructure and the broader economy. Located in industrial towns like Vereeniging and Newcastle, these plants produced long steel products essential for sectors such as railways, construction, and mining—industries that were foundational to modern South Africa.
A Century-Old Industry in Crisis
For decades, South Africa’s steel industry has been the backbone of its industrial economy. At its height in the 1970s, the industry was a pillar of strength, providing employment, infrastructure, and economic stability. However, the impending closure of ArcelorMittal South Africa’s long steel plants in Vereeniging and Newcastle now threatens to dismantle this once-flourishing sector, potentially wiping out 100,000 jobs and further crippling the country’s already struggling manufacturing base.
The challenges facing the South African steel industry are numerous. An influx of cheap Chinese imports, escalating operational costs, and US tariffs on steel have pushed the sector into a deep crisis. With rolling blackouts, an unreliable rail network, and inconsistent government policies, ArcelorMittal South Africa is now on the brink of shutting down vital plants that have fueled the country’s economic growth for almost a century.
The consequences of these closures extend far beyond the workers at the mills. The entire supply chain—including mining, rail, construction, and automotive industries—relies on locally produced steel. Without it, these industries may be forced to either source materials from abroad or shut down entirely, leading to further economic devastation.
A Lifeline Under Threat: The Struggles of Workers and Local Businesses
For workers like Vusumzi Nguse, the closure of ArcelorMittal’s plants spells an uncertain future. Twice a year, for the past decade, Nguse has walked through the streets of his township in Vereeniging, hoping to secure work at the steel mill. Now, with a family of five to support, he fears he may soon join the ranks of the unemployed, in a country where nearly one in three people are already without work.
“All of us living here came from outside to work there,” Nguse explains, pointing toward the towering chimneys of the mill. “My next move is I’ll just look for anything I can find. It’s just about surviving now.”
His story is one of thousands. The closure of the mills would not only put thousands of direct employees out of work, but it would also trigger a devastating ripple effect throughout various industries. According to the South African Iron and Steel Institute, shutting down ArcelorMittal’s long steel division could result in the loss of up to 100,000 jobs.
Justin Corbett, CEO of Rand York, a company that manufactures products using steel from Newcastle’s mill, describes the situation as catastrophic. “It is impossible to overstate just how disastrous this would be for South African manufacturing,” Corbett warns. His company is now considering relocating to India, following in the footsteps of other manufacturers who have found it increasingly difficult to operate in South Africa.
Current Challenges Facing the Steel Industry
In recent years, South Africa’s steel industry has been beset by a confluence of challenges:
- Economic Stagnation: The nation has experienced prolonged periods of low economic growth, limiting domestic demand for steel products.
- High Operational Costs: Rising electricity tariffs, increased labor costs, and inefficiencies in rail freight have escalated production expenses for steel manufacturers.
- Influx of Cheap Imports: The global steel market has seen an oversupply, particularly from China, leading to a surge in low-cost steel imports that undercut local producers.
- Trade Barriers: The imposition of tariffs, such as the 25% duties by the United States, has further restricted South Africa’s steel exports, compounding the industry’s woes.
ArcelorMittal South Africa’s Predicament
ArcelorMittal South Africa (AMSA), the continent’s largest steel producer, has been at the epicenter of this crisis. In early 2025, AMSA announced plans to cease operations at its long steel plants in Vereeniging and Newcastle, as well as its rail subsidiary, Amras. This decision was primarily driven by sustained financial losses, with the company’s long steel division reporting an operational loss that doubled to 1.1 billion rand in 2024.
The potential shutdown threatens approximately 3,500 direct jobs, with industry experts warning of a domino effect that could jeopardize up to 100,000 jobs in related sectors, including mining, rail, and automotive industries.
Government’s Intervention and Ongoing Negotiations
Recognizing the catastrophic implications of these closures, the South African government initiated emergency discussions with AMSA to explore avenues for keeping the plants operational. President Cyril Ramaphosa personally engaged with Lakshmi Mittal, executive chair of ArcelorMittal, underscoring the administration’s commitment to preserving the steel industry. In a bid to buy time for comprehensive solutions, the government extended a 380 million rand ($20 million) loan to AMSA, allowing the company to postpone the plant closures and continue operations temporarily.
Broader Economic Implications
The potential loss of these steel mills extends beyond the immediate job losses:
- Manufacturing Sector: The closure would severely impact South Africa’s manufacturing capabilities, diminishing its capacity to produce essential steel products for infrastructure projects.
- Infrastructure Development: President Ramaphosa’s ambitious 940 billion rand infrastructure investment plan, aimed at revitalizing the economy, relies heavily on a robust domestic steel industry. The shutdown of these mills could hinder the execution of planned projects.
- Investor Confidence: The decline of a once-thriving industry could deter both domestic and foreign investment, casting doubts on the country’s economic stability and growth prospects.
Community Impact
The towns of Vereeniging and Newcastle have historically been intertwined with the fortunes of these steel mills. Generations of families have depended on the plants for employment and economic sustenance. The closure threatens not only jobs but also the socio-economic fabric of these communities, leading to increased unemployment, reduced local business activity, and potential social unrest.
The Impact of Global Factors on South Africa’s Steel Sector
South Africa’s steel crisis is not an isolated issue; it is deeply connected to global economic trends.
The influx of cheap steel from China has been one of the biggest challenges. As China’s construction boom slows, its steel manufacturers have flooded global markets with low-cost steel, making it nearly impossible for local producers to compete. In 2023 alone, South Africa imported 4.1 million tons of steel—one-third of which came from China.
Adding to the industry’s woes is the looming implementation of a 25% tariff on steel imports by the United States. If the tariff, expected to take effect in mid-March, is introduced, major steel-producing countries like China will be forced to sell their steel at even lower prices on global markets. This will further undercut South African steelmakers, making it even harder for local manufacturers to compete.
These economic pressures have already taken a toll on ArcelorMittal South Africa. The company’s crude steel production has dropped from 6.4 million metric tonnes in 2014 to just 4.7 million metric tonnes in 2024. The company’s share price has also plummeted—falling by 97% since it was acquired by Lakshmi Mittal’s conglomerate in 2004. Last year alone, ArcelorMittal South Africa reported a staggering R5.8 billion loss.
South Africa’s Infrastructure Failures and Government Struggles
While global factors have played a role in the industry’s decline, South Africa’s own infrastructure failures have only made things worse.
Power shortages have become a major problem for heavy industries, including steel manufacturing. Rolling blackouts, caused by failures at the state-owned power utility Eskom, have disrupted production schedules, increased costs, and pushed businesses to rely on expensive alternative energy sources.
Additionally, the country’s rail and port infrastructure has deteriorated significantly under the mismanagement of state-owned company Transnet. Once an efficient transport system, Transnet’s failures have forced manufacturers to rely on costly road transport to move goods. In 2023 alone, ArcelorMittal South Africa estimated that Transnet’s inefficiencies cost the company R1.4 billion in additional logistics expenses.
Last year, ArcelorMittal’s chair, Bonang Mohale, did not hold back in his criticism of the government’s failures. “The closure of once flourishing businesses such as Newcastle and Vereeniging should serve as a clarion call for citizen activists demanding an end to inaction, inertia, corruption, and misguided, even uninformed policy,” Mohale stated.
Successive governments have struggled to keep the steel industry afloat without the aggressive protectionist policies that were in place during the apartheid era. Historian Faeeza Ballim notes that during the apartheid years, the government took extreme measures to support major state-owned companies, ensuring their survival at all costs. However, since the privatization of the steel sector, the government has failed to provide adequate support to maintain its competitiveness in the global market.
Government Intervention: Too Little, Too Late?
As ArcelorMittal’s crisis deepens, the South African government has finally begun to take action. Last week, the government issued a R380 million ($20 million) emergency loan to ArcelorMittal South Africa, providing a temporary reprieve for the company to continue operations until the end of the month. However, this short-term bailout does little to address the root causes of the industry’s struggles.
President Cyril Ramaphosa has vowed to revitalize South Africa’s industrial sector, promising a R940 billion investment plan aimed at boosting manufacturing and reducing unemployment. Part of this plan includes transforming South Africa into a “giant construction site,” which would, in theory, drive up local demand for steel.
Trade Minister Parks Tau has also insisted that the government will be “more active” in protecting the local steel industry, emphasizing the strategic importance of the sector. “Our investment in the energy network, our investment in the rail network, and in various pipelines means an increase in fixed capital investment, which does mean steel demand will increase,” Tau stated.
However, industry experts remain skeptical. Even if local demand for steel increases, South Africa’s failing infrastructure continues to make exports unviable. “You can only sell so much of your product into the local market,” warns Charles Dednam, head of the South African Iron and Steel Institute. “How do you get the rest of it to export markets if your rail infrastructure is falling apart?”
A Bleak Future for Workers and the Economy
For workers and communities that have depended on the steel industry for generations, the future is uncertain.
Lehonololo Mokwena, a welder from Vereeniging, has seen three generations of his family work in the steel mill. Now, he is watching as the industry collapses before his eyes. “I am just praying,” Mokwena says. “There’s no other work in this town.”
As ArcelorMittal South Africa edges closer to shutting down its long steel plants, the country faces a pivotal moment. If the government and private sector cannot find a solution to revive the steel industry, South Africa risks not only losing a cornerstone of its industrial economy but also deepening its unemployment crisis.
The fight to save South Africa’s steel mills is not just about preserving jobs—it is about safeguarding the country’s industrial future. Without decisive action, an entire sector that once helped South Africa defy global sanctions and build a modern economy may soon become nothing more than a relic of the past.
Future Prospects and Strategic Considerations
To navigate this crisis and rejuvenate its steel industry, South Africa might consider several strategic initiatives:
- Policy Reforms: Implementing supportive policies, such as removing taxes on scrap metal exports and imposing duties on imported steel, could enhance the competitiveness of local producers.
- Cost Management: Negotiating reduced electricity tariffs and rail freight charges would alleviate some of the operational burdens on steel manufacturers.
- Diversification and Modernization: Investing in modern technologies and diversifying product lines could open new markets and reduce reliance on traditional steel products.
- Public-Private Partnerships: Collaborating with private investors to inject capital and expertise into the industry could foster innovation and efficiency.
Conclusion
The battle to save South Africa’s apartheid-era steel mills is emblematic of the broader challenges facing the nation’s industrial sector. It underscores the need for decisive action, strategic planning, and collaborative efforts between the government, industry stakeholders, and communities. Preserving these mills is not just about retaining jobs; it’s about safeguarding a legacy, ensuring economic stability, and paving the way for a resilient industrial future.
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