Do dark days lay ahead for ArcelorMittal Newcastle and its employees, whose livelihood seems to be hanging on a tether?
On Thursday, February 6, ArcelorMittal South Africa (Amsa) said it was planning to shed more jobs at its Newcastle operations before May.
This is after profits dropped to R4.67 billion during the year to the end of December. The decline in profit is due to a slowdown in the global steel demand.
According to Amsa, over 400 employees will be affected by retrenchments. This follows Amsa already cutting more than 1 000 jobs company-wide during a large-scale reorganisation in 2019.
Amsa recently dispensed section 189 notices to workers in Newcastle while processes in Saldanha began at the end of last year.
Facing tough times ahead, the group says it will now focus on the domestic market and Africa, instead of focusing on exporting to destinations such as China. This is to assist in mitigating against escalating costs, which had risen higher than the steel price.
Chief executive Kobus Verster explains the cost base of the business doesn’t really justify exports under current market conditions.
Therefore, Amsa will rather look at growing the South African market, growing the market share here as well as in Africa.
As approximately 400 employees face an uncertain future, Verster explains how average international steel prices fell by a staggering 15%. This adds to the company’s overall realised steel price in dollars dropping by 9%.
Furthermore, Amsa claims its headline earnings fell to R3.3bn for the year from a profit of R968 million. Earnings before interest, tax, depreciation and amortisation also see a loss of R632m.
Total sales volumes fell by 8% to 4 million ton, mainly due to an 11% reduction in domestic sales.
Verster claims an increase in electricity tariffs also had a negative impact on the company’s running operations, spending R3.1bn on electricity for the year. He says the group’s plan around electricity is to reduce consumption by improving efficiencies.
As ArcelorMittal Newcastle faces an uncertain future, what are your thoughts on the situation? How do you feel the retrenchments will affect the Newcastle community?
Share your views and thoughts with us in the comment section below.