Two possible buyers of Saldanha Steel plant
THE DEPARTMENT of Trade, Industry and Competition (DTIC) has received expressions of interest by two parties to buy the Saldanha Steel works from ArcelorMittal South Africa (Amsa), the department said on Sunday.
Amsa announced on November 11 that it would be closing Saldanha Steel following what the company called an operational review of its asset footprint, the department said in a statement.
Trade and Industry Minister Ebrahim Patel had urged Amsa to continue working with the government and social partners to reverse this decision and find solutions that could keep Saldanha Steel in operation and its workers employed.
Patel said: “If no solution is found with ArcelorMittal, they should consider selling the plant to ensure the country does not lose industrial capacity and workers, and to ensure that communities are not displaced.”
The ministry subsequently met Amsa management to request a review of its decision. The ministry advised that potential buyers were considering making a bid for the steel plant and requested that Amsa consider every effort to retain employment in Saldanha, including giving consideration to potential bids by other investors.
Amsa’s decision to place Saldanha on care and maintenance and retrench almost 1 000 workers came despite significant efforts by the government to provide support to prevent job losses across the company and the continued operation of Saldanha Steel.
The DTIC, together with the Public Enterprises Department, Eskom, and Transnet, engaged with Amsa management on support that could be provided to reduce energy and logistics costs for the company and at Saldanha in particular.
The government facilitated engagements with iron ore and coal producers, as well as organised labour, to come up with solutions to reduce costs to avert job losses. The combined support package offered by the government ranged from concessions on iron ore pricing, electricity, water and rail tariffs, providing considerable cost savings.
To support the entire steel and metals value chain, the government brokered a pricing agreement allowing the upstream steel mills to remain sustainable in the domestic market while providing a competitive fair price for the downstream industry.
South Africa was one of the only major primary steel producing countries on the African continent. The African Continental Free Trade Area (AfCFTA), which would come into effect in July next year, was expected to open up additional demand for primary steel across the continent.
The steel sector had faced problems in its operating environment due to global oversupply.
However, initiatives such as the AfCFTA provided opportunities to drive increased regional demand for steel in construction, automotive manufacturing, and mining.
“We have embarked on the process to develop a master plan for the steel and metals value chain in South Africa which will include both demand- and supply-side measures, and bring greater competitiveness and dynamism to the entire steel and metals industry.
“A number of initiatives are in progress to foster greater demand for steel by both the public and private sector, and to improve the cost base across the industry,” Patel said.