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Steel maker ArcelorMittal seeks ₹1,500 crore to save South African mills: Report
Closure of the company's steel mills would lead to 3,500 direct and indirect job losses.
Indian steel manufacturer ArcelorMittal's South African unit ArcelorMittal South Africa is seeking a 3.1 billion rand (nearly ₹1,500 crore) rescue package to stop the closure of its steel mills in the country, Bloomberg reported citing Sunday Times.
The company is seeking the funds from Industrial Development Corp, a national finance institution that holds a 6.4% stake in ArcelorMittal South Africa. The rescue package would prevent the complete shutdown of the company's long-steel Vereeniging and Newcastle facilities.
The mills' shutdown, which was earlier slated for the second quarter, would lead to the loss of about 3,500 direct and indirect jobs, according to Sunday Times' report.
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ArcelorMittal South Africa had initially planned to shut the facilities in January but later postponed it by a month to complete orders. Rescue talks with the government have failed to yield results and the operating environment has deteriorated amid high power and transportation costs and cheaper imports.
The company known as AMSA wants antitrust laws relaxed to enable it to merge with smaller mills and lower electricity prices from state-owned utility Eskom Holdings SOC Ltd., the newspaper reported, citing the people.
AMSA isn’t in a position to communicate further on the matter, company spokesperson Tami Didiza said in an emailed response to questions.
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The IDC and the Department of Trade, Industry and Competition didn’t immediate respond to requests for comment outside of regular business hours.
The DTIC is looking at options to retain the capacity to make long-steel products in the country should AMSA be unable to operate the plants, Sunday Times said, citing Tebogo Makube, the department’s acting deputy director-general of industrial development.
The government provided AMSA 380 million rand to keep operations running and the Newcastle plant could operate for another year should more money come, the newspaper reported, citing Makube.
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AMSA has applied to the Unemployment Insurance Fund for money to partly cover the salaries of the 3,500 affected workers, Sunday Times said, adding this would cost about 2 billion rand.
The IDC provided the steel producer with 1.2 billion rand of working capital last month, the newspaper said, citing Tshepo Ramodibe, the lender’s head of corporate affairs.
