Union Vows to “Vigorously Challenge” Amsa Layoffs

The trade union Solidarity is standing firm against the steel giant ArcelorMittal South Africa (Amsa), which has expressed intentions to shut down its long steel operations, along with potential layoffs at its Vanderbijlpark facility.

The anticipated job losses at the Newcastle and Vereeniging plants have now surged from 3,500 to about 4,000 after a new restructuring notice was sent to the union regarding the Vanderbijlpark plant on Monday morning.

Amsa share price

Willie Venter, Solidarity’s deputy secretary, pointed out that a complete termination of the long steel division would trigger excessive capacity in the support functions at Vanderbijlpark.

Additionally, Amsa intends to shut down its coke manufacturing operations—considered financially unfeasible—as well as its central workshop. According to Amsa, these actions necessitate an extra 500 job cuts.

The notice sent to Solidarity reveals that Amsa currently employs around 5,600 individuals, indicating a plan to reduce its workforce by 71%.

According to Solidarity, closures may begin as soon as the end of September.

“We will follow the legislated processes and firmly oppose the closure of the plants,” Venter stated.

He added that organized labor has not been involved in the search for investors for the struggling steelmaker, which is being led by the state-owned Industrial Development Corporation (IDC). Recently, the IDC provided Amsa with nearly R1.7 billion in assistance.

Venter remarked that while it’s reasonable to expect company owners to invest in new technology, this will only happen if the government establishes a conducive environment.

Amsa has cited soaring electricity costs and structural logistical obstacles as contributing factors to its challenges.

Requests for reduced electricity tariffs for the Newcastle and Vanderbijlpark plants were submitted to Eskom last October, but the utility denied them, asserting that Amsa does not meet the criteria under the long-term negotiated pricing agreement framework.

In a recent meeting, the energy regulator Nersa concluded that Amsa does substantially qualify and referred the matter back to Eskom for negotiations on the terms of the agreement. Once an agreement is made, it will need to return to Nersa for final approval.

Nellis Bester, chairperson of the Ferro-Alloy Producers’ Association (Fapa), noted that such negotiations could take more than a year.

“We don’t have that time,” Venter asserted. He emphasized that Solidarity will employ every necessary strategy to pressure the government into acting urgently to alleviate challenges facing Amsa and other manufacturers in similar situations.

“This closure is a direct result of the government’s failure to foster a competitive industrial environment and to rapidly identify and implement practical solutions. Our steel industry has suffered through years of power crises, a failing rail and port system, and a government incapable of making crucial policy decisions to protect our industries. Now, thousands of jobs and livelihoods are at stake,” Venter stressed.

Read:
Nersa approves cheaper electricity for Amsa
Confusion and panic over proposed steel tariff increases
ArcelorMittal SA’s perfect storm of challenges

He warned that these job cuts will not only affect the steel industry but could lead to a ‘retrenchment bloodbath’ across various sectors in South Africa.

“If major companies like Amsa can no longer sustain their operations, the government must realize that the nation is on the brink of an industrial disaster,” he added.

The closure of Amsa’s long steel plants is anticipated to have a cascade effect on downstream manufacturing and will significantly impact several other industries that rely on Amsa’s products.

Solidarity is dedicated to supporting its members during the upcoming consultation process at Amsa and will utilize all legal and labor avenues available to safeguard their jobs and interests.

Read: ArcelorMittal takes Transnet to the Competition Tribunal for market abuse

“We will not passively stand by while thousands of families lose their income due to government failures. Solidarity will actively combat this retrenchment crisis on behalf of its members with employers and the government, while also assisting those affected through various job-protection initiatives to minimize the impact of this governmental failure,” Venter emphasized.

Solidarity warns that Amsa’s announcement, much like Ford’s last month, marks the beginning of more substantial job losses unless the government takes immediate action to bolster the industrial sector and restore stability. Bridgestone SA has already closed its operations, chrome smelters are under significant financial strain, and the mining sector continues to face escalating challenges.

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