ArcelorMittal South Africa plans to shut down its long steel operations due to weak demand and persistent infrastructure problems, which will result in layoffs of around 3,500 jobs.

In a statement, the steelmaker said that local steel consumption has fallen 20% over the past 7 years, due to limited infrastructure spend and project delays.

South Africa's persistent rail logistics problems and an intensifying electricity crisis had also added costs to the business, ArcelorMittal South Africa added.

“In the circumstances, the ArcelorMittal South Africa Board and Management have had no option but to embark on a process that contemplates the wind down of the Company's Longs Business, which for now may be placed in care and maintenance."

Statement from ArcelorMittal South Africa

“In the circumstances, the ArcelorMittal South Africa Board and Management have had no option but to embark on a process that contemplates the wind down of the Company's Longs Business, which for now may be placed in care and maintenance," said the company.

The 3,500 jobs that could be affected include full-time staff and contractors.

“The ArcelorMittal South Africa board and management have reached this point after having exhausted all possible options."

Kobus Verster, CEO, ArcelorMittal South Africa

“The ArcelorMittal South Africa board and management have reached this point after having exhausted all possible options," Chief Executive Officer Kobus Verster said in the statement. “We have a duty to ensure that the business remains sustainable in the long term, in the interests of the company and its stakeholders."

ArcelorMittal South Africa’s long steel unit produces fencing material, rail, rods and bars used in the construction, mining and manufacturing sectors.

It also produces foundry, flat steel and tubular products.

Source: Mint