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ArcelorMittal South Africa Announces Layoffs of 3,500 Employees, Resulting in 17% Plunge in Shares

SOUTH AFRICA: In a move triggered by plummeting demand and persistent infrastructure challenges, ArcelorMittal South Africa Ltd declared its intention to shutter its long steel operations, leading to an anticipated loss of approximately 3,500 jobs. Citing a drastic 20% decline in steel consumption over the last seven years within South Africa’s most advanced economy, the steel giant attributed this downturn to inadequate infrastructure investments and prolonged delays in various projects.

ArcelorMittal South Africa highlighted the detrimental impact of the country’s ongoing rail logistics issues and a deepening electricity crisis, which have significantly escalated operational costs. The company stated, “In the circumstances, the ArcelorMittal South Africa Board and Management have had no option but to embark on a process that contemplates the wind down of the Company’s Longs Business, which for now may be placed in care and maintenance.”

The potential layoffs include both full-time employees and contracted workers among the 9,300 personnel previously employed by ArcelorMittal South Africa. Following this announcement, ArcelorMittal South Africa’s shares plummeted by as much as 17% in the Johannesburg stock market. CEO Kobus Verster expressed the exhaustive exploration of all feasible alternatives before reaching this decision, stating, “We have a duty to ensure that the business remains sustainable in the long term, in the interests of the company and its stakeholders.”

The company’s long steel unit is responsible for producing essential materials utilized in construction, mining, and manufacturing sectors, including fencing material, rail, rods, and bars. ArcelorMittal South Africa also manufactures foundry, flat steel, and tubular products. However, the ongoing electricity crisis, coupled with high inflation and reduced demand from key steel-consuming sectors, led the company to report a staggering headline loss of 448 million rand in the first half of the fiscal year compared to a 3 billion rand profit during the same period in the previous year.

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