ArcelorMittal South Africa (Amsa) is staring down the barrel of a difficult period as it prepares for the potential wind-down of its Longs Business—an option that could be realised far ahead of the previously indicated September 30, 2025 deadline. This sobering outlook comes amid ongoing struggles attributed to governmental infrastructure deficiencies and policy missteps that continue to burden the steel producer.
This announcement, made shortly after Amsa forecast slightly reduced headline earnings losses for the six months ending June 30, provoked a sharp reaction from investors. On Monday afternoon, the firm’s share price plummeted by 7.89% to 105 cents on the Johannesburg Stock Exchange, a stark decline from over R5 a share just three years ago. The market’s cautious response underscores growing concerns around the company’s sustainability.
Earlier this year, on March 31, Amsa had temporarily deferred its initial plan to wind down the Long Steel Business, seeking leeway until September 30 after securing a R1.68 billion funding facility from the Industrial Development Corporation (IDC). However, despite these measures, the facility is now fully drawn and Amsa confirmed that it would continue operations through the third quarter while honouring commitments to its customers.
The company’s directors noted with concern that “limited” progress has been made in addressing significant structural issues during this deferral period. An influx of high imports continues to saturate the domestic market, compounding the burden on Amsa’s operations. Moreover, Transnet’s rail performance has hit record lows, forcing the company to shoulder elevated operational risks and mounting costs.
Challenges plaguing Amsa have persisted over several years, ranging from structural distortions exacerbated by the Preferential Pricing System and export taxes favouring scrap-based steelmakers, to policies that fail to provide adequate protection against imports. Additionally, persistent circumvention of tariff protections by local companies, coupled with a lack of prosecution, has further complicated the industry landscape.
Adding to these woes, Amsa has reported a series of rail service interruptions triggered by an unprecedented wave of cable theft and locomotive failures, which jeopardised operations at its blast furnaces and necessitated unplanned road transport. This decision has incurred an extra R317 million in direct and operational costs during the current reporting period, compounding the already strained financial situation.
In the midst of these operational hurdles, Amsa has been exploring various strategic options since March, while the IDC continues to conduct due diligence and the government seeks structural interventions. The company’s directors have warned that, without timely solutions, they may have no choice but to implement operational measures to prepare for an earlier-than-expected closure of the Longs Business.
Despite these challenges, Amsa has projected a 15% improvement in earnings per share, expecting a loss of between R0.82 and R0.93 for the six months ending June 30, a modest reduction from last year’s loss of R1.09 per share. The full details of this interim performance are set to be disclosed on July 31.
As the global steel industry grapples with a cyclical downturn that has lasted almost two years—a duration notably longer than the norm—Amsa is not immune to these market forces. According to the World Steel Association, global crude steel production dipped by 1.3% from January to May 2025 compared to the same period last year.
Domestically, the economic landscape remains bleak. With all sectors, barring agriculture, contributing to a dim annual GDP outlook, Amsa finds itself grappling with sluggish demand in key steel-consuming industries like construction, automotive, and mining. Sales volumes for flat steel products are being adversely affected by high volumes of imports, while uncertainty around the future of long steel products continues to hinder sales projections.
With imports now constituting over 35% of apparent steel consumption in South Africa, the operational integrity and future sustainability of Amsa—and the entire domestic steel sector—appear precarious. The steel and manufacturing industries recently expressed their disillusionment with government policies in front of the portfolio committee responsible for trade, industry, and competition, further signalling a call for immediate and effective reforms.