ArcelorMittal South Africa announced plans to shut down its Newcastle Works plant in KwaZulu-Natal, citing prolonged financial losses and ongoing challenges in the steel industry.
Shares of the Johannesburg-listed company fell more than 15% after the closure was confirmed. The move is expected to affect around 3,500 direct and indirect jobs.
The Newcastle Works plant produces long steel products such as rods, rails, and bars used in construction, mining, and manufacturing. The company said the closure comes after years of weak demand, rising energy and logistics costs, and competition from cheaper steel imports, particularly from China. 
Production at the facility will cease by the end of January 2025, with the full wind-down expected to be completed by March. Some operations, including coke-making, will continue at reduced levels.
The decision follows failed efforts to keep the plant operational. ArcelorMittal South Africa initially reversed plans to close the plant in early 2024, hoping that a recovery in global steel prices would help restore profitability. However, those gains were short-lived as Chinese steel exports surged and prices for products like hot-rolled coil fell below $500 per ton by late 2024.
The company’s long-products division, which relies on blast furnace technology, has struggled to compete with smaller, scrap-based steelmakers that use electric arc furnaces. These “mini mills” benefit from government policies that allow them to buy scrap metal at discounted prices, making them more competitive.
CEO Kobus Verster said the structural challenges facing the long-products business could not be resolved, despite consultations with government and stakeholders.
“Further delays would have jeopardized the sustainability of the company,” Verster said.
The closure highlights the broader challenges facing South Africa’s steel industry, which has been in decline since the 2008 financial crisis. Rising production costs, deteriorating infrastructure, and weak domestic demand have hit producers hard, while global oversupply has pushed prices down.
The South African government introduced a price preference system (PPS) to support local steelmakers by restricting scrap exports. However, the policy has primarily benefited mini mills at the expense of blast furnace operators like ArcelorMittal.
ArcelorMittal South Africa also issued a profit warning ahead of its 2024 results, scheduled for February. The company expects a headline loss of between R4.06 and R4.41 per share, compared with a loss of R1.70 per share the previous year.
Despite the closure of the long-products business, Verster said the company remains focused on its flat steel division, which produces steel for industries such as automotive, mining, and renewable energy.
ArcelorMittal is pursuing high-value investment opportunities to support downstream industries and improve its balance sheet.
However, the closure of Newcastle Works will have significant socioeconomic impacts on the region, which is heavily dependent on the plant for jobs and economic activity.
South Africa’s steel sector remains under pressure from cheap imports, weak demand, and rising costs, with many industry stakeholders calling for radical interventions to address the ongoing crisis.
