The steel plant in Saldana, Western Cape will close its doors and 900 workers will be unemployed this Christmas.
ArcelorMittal announced in a statement on Monday that as part of the first phase of its strategic review, it will scale down its operations at the Saldana plant and indicate that the plant will be put into a stand-up care and maintenance. According to the company, the process will be completed by the first quarter of 2020.
Amsa CEO Kobus Verster said in a statement that the Saldana operations were founded and built on the premise of low input costs that give the company a competitive cost advantage in export markets. He further argues that over the years the structural cost advantage has been wiped out and that Saldanha no longer competes sustainably and effectively in these markets. This is mainly due to more expensive raw materials and regulated prices (a reference to, among other things)
have suffered significant losses in the past and the prospects remain weak in the short to medium term, ”he says.
Amsa says he realizes how significant the plant’s closure will have on the Western Cape.
The company says its plant in Vanderbijlpark, Gauteng, will take over local steel orders from Saldanha.
“While this was a very difficult decision to make, especially given that the country is struggling with high unemployment and low economic growth, we believe it was absolutely necessary to ensure the sustainability of the rest of our operations,” says Verster.
Amsa has long warned that the plant in Saldanha is under tremendous pressure.
He already warned in 2017 that if he could not negotiate a better power tariff with Eskom, the plant’s doors would have to be closed.