The announcement by ArcelorMittal South Africa on the closure of its operations in Newcastle and Vereeniging, as well as ArcelorMittal Rail and Structural, will have a devastating impact on a number of fronts. These include the 3 500 employees likely to be affected, the surrounding communities, suppliers, contractors and the broader metals and engineering sector.

Downstream industries are heavily reliant on the long-products that come from these plants, to which a switch-over will not happen overnight. Even where these products can be imported, this will result in the exporting of jobs that are desperately needed in South Africa.

Moreover, the logistics challenges facing the country raise serious questions whether port and rail infrastructure can get product to the end manufacturers.

A slow economy and difficult trading environment, high transport, logistics and energy costs, exacerbated by logistic failures and their resultant cost implications, the introduction of a preferential pricing system for scrap, a 20% export duty and more recently a ban on scrap exports have all played a major role in contributing to the current state of affairs. Compounding this is the Department of Trade, Industry and Competition’s (DTIC) blinkered and narrow focus on how best to create an enabling environment conducive to growth, stability and job security.

The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) has repeatedly warned that the decisions relating to the scrap metal policy and its industrial policy consequences will yield casualties. What we are seeing unfolding at ArcelorMittal feeds directly into these warnings.

SEIFSA’s acting for and on behalf of its broader membership, which makes up by far the most representative voice of both the upstream and downstream value chains in the metals and engineering industry, is firmly of the view that these and related industrial policy matters be urgently escalated to the Economic Cluster of Ministries, as it seems the DTIC seemingly does not have the capacity nor the grasp of the broader implications of these developments.

The matter is now beyond urgent and we urge the president and key ministers in the Economic Cluster to treat it as such, if we are to avoid a socio-economic catastrophe of gigantic proportions in the metals and engineering industry which will reverberate throughout the economy and the continent – impacting the auto, motor, construction and mining sub-sector of the economy and all who work in it.

The reconstruction and recovery of the South African economy, and more specifically the metals and engineering industry, must be looked at in the wider context of reindustrialising critical sectors, along with all the other challenges facing the economy: from energy and logistics to water infrastructure and crime.

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