Steel Giant Arcelor Mittal to shut down some of its South African Steel Plants

ArcelorMittal South Africa, the largest steelmakers in country has announced to shut down some South African steel plants. The company may close some operations pending a review as it looks to strengthen its long-term sustainability and battle cheap imports, rising costs and a flagging local economy.

By actively addressing those operating sites, individual plants and production areas which historically have had a negative impact on the company's financial results, the board aims to strengthen the financial fundamentals of those business areas, the firm said in a statement.

The company said it had begun consultations with its employees and trade unions on jobs but did not provide further details.

The company supplies more than 60% of South Africa's steel. The country's steel consumption was currently at its lowest level in a decade, down 30% from 2007. The company has suffered in a huge operating loss, which lost around ZAR 222 million in the first half of 2019, a dramatic decrease compared with last year's ZAR 1.22 million operating profit. This plan is being quite supported by the investor and the market which expects to bring back the financial health to the group.

Apart from this, the company is also evaluating a potential sale of some of its iron ore operations in Canada, Brazil and Liberia as the world's biggest steelmaker seeks to cut debt by divesting non-core businesses. The organisation is in talks with financial advisers about options including selling partial or full stakes in at least some of the assets. European producers have been hit by a slump in demand from the auto industry and competition from cheap imports. That's also making it hard for them to pass on to customers higher prices for iron ore, a key steelmaking ingredient, that are being stoked by mine closures in Brazil.

ArcelorMittal's mines and strategic contracts produced 58.5 MnT of iron ore last year. The company's Canadian business produces more than 26 million tons of iron ore concentrate a year and has annual iron ore production capacity of 7.1 million tons in Brazil. ArcelorMittal has struggled for years with its Nimba iron ore operation in Liberia, halting an expansion plan after Ebola devastated the West African country in 2014.