South Africa’s largest steel maker has warned that without urgent government protection, it will be a matter of time before local production is no longer viable.
This follows the announcement that more jobs are to be cut at ArcelorMittal, following last year’s statement that 3 500 jobs at its Vanderbijlpark plant would be slashed. Initially, the company said it would have to wind down its entire long steel operation, but later reversed that decision.
The industry has teetered on the brink of collapse for more than a decade because of low global demand and rising price pressures. Chinese and Thai price undercutting has been a key factor in its decline.
ArcelorMittal employs 9 000 workers, but many more downstream jobs are at stake.
Company spokesperson Tami Didiza said that “should these issues not be addressed as a matter of extreme urgency, it will only be a matter of time before the viability of the local integrated primary steel industry will be at risk”.
Didiza declined to give a figure for the number of retrenchments now on the cards, saying this will depend on how many workers can be reassigned.
He said voluntary severance packages in certain areas of the business will be offered, while some employees will be able to apply to fill new and existing vacancies.
The company, working with the National Union of Metal Workers of South Africa, announced that it will try to help affected employees by applying for benefits under the government’s training lay-off scheme through the department of employment and labour.
During a lay-off, the state covers the worker’s training costs and provides an allowance for up to six months. Companies qualify if they face closure or distress but have a strong likelihood of becoming sustainable with short-term support.
But it is unclear what training programmes are in place for jobless steel workers and how their skills can be repurposed.
Asked how steelworkers can be upskilled or re-skilled, the department of employment and labour said this falls in the ambit of the Commission for Conciliation, Mediation and Arbitration, which did not respond to questions from the Mail & Guardian.
Skills in the manufacturing sector should be transferable but research has shown that there is no crossover between industries, said Ayabonga Cawe, the chief commissioner of the International Trade Administration Commission.
“This is because there are no roles. There are no labour demands that can absorb these skills. One fundamental characteristic of the South African labour market and its economy is its inability to mop up workers who have certain skills that may be relevant to other industries,” Cawe said.
ArcelorMittal’s Didiza said the company would offer voluntary severance packages to bargaining units in raw materials, the sinter plant, blast furnace, tar plants, foundries and the steel plant based at Vanderbijlpark.
“The redundancies are for operational reasons rather than because of labour cost savings. The coke batteries have come to the end of their useful life and jobs there became redundant,” he said.
This is the second retrenchment notice issued by ArcelorMittal in 12 months, following its decision in November last year to wind down its long steel business, which produces wire, rods, rail and bars.
Cheap steel imports from the Asian market, particularly in China, have subdued the demand for South African produced steel products, putting pressure on the sector.
South Africa’s official trade statistics show a significant surge in imports of value-added steel products, with year-to-date imports rising by 17.5%, according to a South African Iron and Steel Institute report released in November this year.
“Cheap steel imports of variable quality continue to impact the local market. The absence of trade safeguard measures (which currently operate extensively internationally) apply to the importation of cheap steel products of variable quality,” Didiza said.
This week the International Trade Administration of Commission of South Africa (Itac) announced that the South African Revenue Service (Sars) will provisionally implement duties on imported structural steel.
This follows Itac’s request to the tax agency to impose 52.81% duties on steel imports from China, and 9.12% duties on imports from Thailand, for six months from 29 November, while the investigation is finalised.
The investigation began after Itac found prima facie evidence that China and Thailand were dumping steel in the Southern African Customs Union — that is, at prices below production costs — causing material harm to the local industry.
Didiza said such practices “have far-reaching effects on the local integrated primary steel industry, including a negative impact on the downstream, direct and indirect job losses, an increase in imports and a loss of critical local manufacturing and opportunities for localisation and beneficiation”.
