BL Premium reports that against a backdrop of talks on a possible R1bn bailout for ArcelorMittal SA (Amsa), an analyst has cast doubt on fears that the closure of the steel maker’s long-steel plants would lead to the sector’s collapse.
In a note shared with Nedbank private wealth clients last week, independent political and economic analyst JP Landman said there would be life after the closure of Amsa’s long-steel plants. He pointed out that that mini-mills supplied half of the long steel and that about 32% of consumption was imported. Stakeholders, including the government, have been scrambling to find a way to revive the company and avert job losses since learning early this month that Amsa would be closing its long-steel plants in Newcastle and Vereeniging. This would result in 3,500 direct job losses and put 25,000 more jobs in the steel value chain at risk. However, Landman argued that the local market was not likely to suffer a shortage because steel could be bought and imported at low cost from various sources while mini-mills already provided half of SA’s long-steel needs. "The mini-mills may well start making some of the smaller products historically made by Amsa," Landman opined. But Elias Monage, president of the Steel and Engineering Industries Federation of Southern Africa, disagreed with the idea that the gaps left by Amsa could be replaced by existing alternatives. Monage said that there were differences in the Amsa and mini-mills processes and the quality of steel they produced. In his view, to rely on imports and so support employment in other countries would set a dangerous precedent. "As a country, we need every job we can create and protect given the increase in unemployment figures," Monage stated.
- Read the full original of the report in the above regard by Michelle Gumede at BusinessLive (subscriber access only)
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