Johannesburg, Jan 6 (IANS): Steel producer ArcelorMittal South Africa Ltd announced on Monday that it is shutting down its loss-making long steel business in the country, a move that is likely to hit about 3,500 direct and indirect jobs.

The closure of the operations has been on the anvil since November amid prolonged weak economic conditions, logistics and energy challenges and a flood of cheap imports from China. The firm’s shares fell as much as 15 per cent in early trading, after the announcement.

“The company is at a point where any further delay could affect the sustainability of the company and therefore, a decision cannot be pushed back any further. The Board and Management of ArcelorMittal South Africa have a fiduciary and legal duty to ensure that the overall business remains sustainable in the longer term,” the company said in a statement.

While the company appreciates the support from the Government and other stakeholders, and having made some progress with the identified initiatives, these have not been adequate, the statement explained.

ArcelorMittal South Africa said persistent high logistics and energy costs, combined with insufficient policy interventions, (especially those policy decisions made some time ago) relating to the substantial subsidisation of scrap-based steelmaking operations to the detriment of the Newcastle Works, which beneficiates largely South African-sourced raw materials, has left the Longs Business unsustainable.

Despite all efforts, unfortunately, the package of initiatives sought has not materialised to a level that will change the fundamentals of the structural problems the company has been experiencing in the Longs Business, the company said.

By year-end, the company faced no alternative but to proceed with the winding down of the Longs Business, prioritising a well-considered and responsible process to minimise the impact on employees and stakeholders, while ensuring the sustainability of its remaining operations.

Furthermore, market conditions worsened into Q4 2024, with global steel demand and prices under severe pressure which detrimentally affected the financial performance of the entire ArcelorMittal South Africa business, the statement added.