You are here: Home » Companies » News
Business Standard

L N Mittal's South African steel operations to shed jobs

To retrench staff as part of restructuring plans amid growing losses

Press Trust of India  |  Johannesburg 

L N Mittal's South African steel operations to shed jobs

The South African of Lakshmi Mittal’s global empire, Arcelor-Mittal SA (AMSA), has announced that it may have to retrench staff as part of restructuring plans amid growing losses.

The proposal comes barely days after Arcelor-Mittal SA’s (AMSA) black economic empowerment partner Likamva Resources said it was willing to increase its 17 per cent stake in Africa’s biggest producer despite its loss-making record. However, the unions have decided to fight the move.

(AMSA), born out of Mittal’s buyout of state manufacturer ISCOR more than a decade ago after the magnate first rescued it from total collapse, last made a profit seven years ago. After a peak in mid-2008, AMSA’s share price has seen a 98 per cent drop.

Even though produces about 70 per cent of South Africa’s steel, the current recession in the country, as well as cheaper Chinese imports, have seen it take a battering. Last year, there was urgent government intervention after Mittal’s threatened closure of one of its plants put the lives of the entire town of Vanderbijlpark, south of Johannesburg, in jeopardy through unemployment.

Previous interventions to turn the business around had failed, leading to the company considering other cost-cutting measures, including the sale of its non-core assets, chief executive Wim de Klerk was quoted by the Business Report.

“It is difficult to estimate the number of employees who may eventually be retrenched because of the proposed restructuring and efficiency measures as this is subject to the outcome of the consultation and other avoidance measures,” he said.

said the restructuring came as the industry was under pressure from cheap imports, the volatile exchange rate and rising input costs.

Two major unions, the National Union of Metalworkers of South Africa and Solidarity, have said they’d engage to avoid retrenchments of its members as far as possible. But De Klerk said the outlook is likely to change in the foreseeable future despite higher import duties and an increase in demand for government projects.

First Published: Sun, August 20 2017. 00:05 IST