ArcelorMittal announces part-closure of S.Africa steel business

JOHANNESBURG - The world's second-largest steelmaker, ArcelorMittal, announced Tuesday it would shutter part of its steel business in South Africa, which one union said would result in the loss of around 4,000 jobs.

Its long steel division, which makes key construction products such as wires, beams and train tracks, had struggled for years in the face of the shrinking South African market, failing railway system and disruptive power cuts that have crippled the economy.

The steel giant said it had been trying for years to secure the business, including through efforts to reach a deal with the government and other stakeholders before the end of a 30 September deadline.

"Unfortunately, no solution has been concluded as yet," ArcelorMittal South Africa (AMSA) said in a statement.

Long steel accounts for about a third of ArcelorMittal's business in South Africa, compared to two-thirds for flat steel used in the automobile, aeronautics and household appliance industries.

Its flat steel business would remain in operation, the firm said.

A blast furnacein Newcastle, 340 kilometres (210 miles) north of the harbour city of Durban, had been placed "into temporary care and maintenance" as the company prepared to wind down its long steel production, it added.

Trade union Solidarity said the closure would result in the loss of more than 4,000 jobs.

With steel among the sectors expected to be hit by US tariffs of 30 percent slapped on South African exports, the union warned of "a retrenchment bloodbath that could hit multiple industries".

"If large companies like AMSA can no longer keep their heads above water, the government must realise that the country is on the brink of an industrial disaster," Solidarity's deputy secretary-general Willie Venter said.

South Africa's unemployment rate is above 30 percent, a key factor holding back the sputtering economy.

AMSA said in July it faced "a subdued market demand, disruptive rail and electricity interruptions" as well as competition from imports that affected domestic sales, which accounted for almost 80 percent of its local production