State bailout delays ArcelorMittal SA closure, saving thousands of jobs
ArcelorMittal SA secures a R1.7-billion bailout from the IDC, delaying its closure until August 2025 and saving 3,500 jobs.
ArcelorMittal South Africa has secured a temporary lifeline after facing potential shutdown, thanks to a R1.7-billion bailout from the Industrial Development Corporation (IDC).
This financial boost will delay the closure of its long-steel operations—critical to South Africa’s automotive industry—until at least 31 August 2025, safeguarding approximately 3,500 jobs in a struggling economy, reports BusinessTech.
ArcelorMittal SA’s challenges and state intervention
The steel giant has been grappling with high energy costs, logistical hurdles, and export tax issues that threatened its sustainability. The IDC funding, structured as a repayable facility, offers a much-needed extension, though its repayment terms depend on the company’s financial performance, solvency, and liquidity. In exchange, ArcelorMittal SA has committed to maintaining operations and retaining jobs throughout the deferral period, though operational restructuring in certain areas remains a possibility.
Temporary relief but long-term uncertainty
ArcelorMittal SA has also secured support from the Temporary Employee Relief Scheme (TERS) to help cover employee salaries, alleviating pressure on the IDC funding. The government intends to use this reprieve to address structural industry issues affecting the company.
Despite this intervention, longstanding industry concerns remain unresolved. Earlier this year, ArcelorMittal SA cited ongoing struggles with government engagement over key operational challenges, including:
- The scrap export tax, which the company claims unfairly disadvantages its operations.
- Continued inefficiencies in port and rail logistics, with Transnet refusing to renegotiate tariffs.
- Lack of progress on a negotiated pricing agreement with Eskom to ease electricity costs.
While the bailout has bought time, the future of ArcelorMittal SA beyond August 2025 remains uncertain. Whether these pressing issues will be resolved in time to ensure long-term sustainability is yet to be seen.