Future for ArcelorMittal looks 'bleak' - will govt step in again to help save jobs?

The Money Show's Stephen Grootes is joined by Saul Levin, executive director of Trade & Industrial Policy Strategies (TIPS).

At the end of March, ArcelorMittal SA (AMSA) announced the decision to wind down its long steel business had been deferred for at least 6 months, to end-September this year.

At the time, government was involved in discussions with the steel company to try and help save the 3,500 jobs on the line.

The eventual deferral of the closure was enabled by a facility provided by the Industrial Development Corporation of SA (IDC).

That facility has now been fully drawn, Arcelor says in a statement, enabling its Longs business to continue for the third quarter.

Its future after September looks uncertain.

The company has long raised the issues curtailing its operations which include high electricity tariffs, poor rail service and competitors circumventing existing tariff protections 'without prosecution'.

Stephen Grootes gets comment from Trade and Industrial Policy Strategies' (TIPS') Saul Levin.

The ever-increasing price of electricity is just one of the factors affecting a number of energy- and transport-intensive industries, Levin remarks.

But there are also other issues at play affecting Arcelor, he adds.

"The company hasn't been doing well for over a decade, and they've run with losses almost every year except for three over the last 12 years. This is just the latest in a series of crises. It particularly affects the Newcastle mill, with that particular plant finding it very difficult to compete with the smaller players in the market."

Saul Levin, Executive Director - Trade & Industrial Policy Strategies

How much more will government be able to help?

Levin points out that the state's being asked to bail out a number of players and obviously there is a limit to what they could contribute to bailing out AMSA again.

"ArcelorMittal aren't able to pay back that facility they were given because they're running at a loss... If things haven't been able to be turned around over this six-month period - and it seems not, then it does look very bleak for the Newcastle operation."

Saul Levin, Executive Director - Trade & Industrial Policy Strategies

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