ArcelorMittal SA CEO Kobus Verster. (Photo: Freddy Mavunda © Business Day) 
Speaking after the release of devastating interim results that showed a loss of R394-million despite a cash injection from the Industrial Development Corporation, Verster delivered a blunt message to the government: fix the structural problems strangling steel production or watch South Africa’s last integrated steelmaker cannibalise itself to survive.
“If that’s not on the cards and we can’t get agreement on that, then I have to find an alternative to basically recapitalise the business from within,” Verster told Daily Maverick, outlining plans to sell off valuable assets including Saldanha Steel, which he described as being “in very good condition” with potential for green direct reduced iron production.
“Saldanha Steel is a valuable asset. We had intent for it in terms of green DRI (direct reduced iron). The assets are in a very good condition, but I can’t wait five or six or seven years. Maybe there’s a partnership or another party that can give me value.”
The warning comes as ArcelorMittal prepares to monetise what it calls “non-core assets” – including Saldanha Steel, the Tubular Mill, Vereeniging Bar Mill, ArcelorMittal Rail and Structures, and various properties – in a desperate bid to shore up its balance sheet and keep the lights on at its remaining flat steel operations.
What this means for you
As I reported just a few weeks ago, the closure of the long steel business directly threatens about 3,500 jobs. However, as seen with the closure of the Saldanha Steel plant in 2020, the collateral damage goes far beyond that. At the time, management said about 900 direct jobs would be lost. The downstream impact has been far wider, forcing the closure of, among many other supplementary businesses, a local car wash that was used by Saldanha Steel employees. Steel businesses that relied on Saldanha Steel, such as Anderson & Kerr, as well as Duferco Steel Processing, have also taken knocks that resulted in retrenchments. Five years later, many of the employees who once worked at Saldanha Steel remain unemployed and at least one has taken on a job as a local petrol attendant to keep food on the table.
Read more: ArcelorMittal responds, says the mini-mill dream could melt down
‘Misguided policies’
At the heart of ArcelorMittal’s crisis lies what Verster characterises as a web of “misguided policies” that have systematically undermined integrated steel production while inadvertently subsidising smaller scrap-based mills.
The most contentious is the Price Preference System on scrap metal, which ArcelorMittal claims has transferred “more than R60-billion over a decade from informal workers and recyclers to a handful of capital-intensive scrap-based mills.”
But scrap policy is just one front in what has become an infrastructure war of attrition. Rail performance has “deteriorated substantially,” forcing ArcelorMittal to transport 62% of raw materials by road – up from 20% – while rail transport dropped 30%.
“Our plants are designed to take a train, tip it into our conveyor system, and it takes everything to the relevant places,” Verster explained. “Now you have to go and offload those big trucks in the yard, you have to get equipment and move that around, and you have to accommodate about 370 trucks per day into your operation. Those are the types of costs.”
The combined impact of disruptive rail and electricity interruptions added R358-million in costs during the first half of 2025 alone.
Import invasion
While domestic infrastructure crumbles, imports have surged to more than 35% of local steel demand, prompting ArcelorMittal to seek protection through safeguard duties.
The company achieved a partial victory in June when a provisional safeguard duty of 52.34% was imposed on corrosion-resistant steel coil for 200 days, based on findings of “serious injury” to local industry and “critical circumstances”.
But Verster argues the government should go much further: “The government should be much more aggressive in implementing more blanket protection against all steel, which all other countries are doing. Countries have 25% duties, and they enforce it – then you should not have less.”
He pointed to Canada’s quotas and additional duties to exclude Chinese products, while noting that even provisional duties already in place haven’t shown their full impact, partly because imports are sometimes declared at “10% of the value”.
The long steel endgame
Despite the IDC’s R1.683-billion lifeline – now fully utilised – the long steel business remains on death row. Verster confirmed that “the timeline and our conditions are exactly the same” for the 30 September wind-down date.
The IDC funding, he said, has “largely neutralised” the losses from the long steel business, but ArcelorMittal “cannot assume any further financial risks related to the Long Steel Business beyond the next few months”.
The company is awaiting the outcome of the IDC’s due diligence process, but appears to be preparing for the worst. Asset monetisation plans are already being finalised, with proceeds earmarked to “reduce debt levels and invest in the core Flats Business for earnings and cashflow improvement”.
Cautious optimism
Despite the grim numbers, Verster detected signs of improvement in recent months. “Recently, we perform[ed] a lot better on that front and it also appears the market is taking a bit more material in the last two months than previously, so hopefully that will be behind us.”
The company is pursuing what it calls “export replacement” strategies. Verster said, “Our intent is not just to recover the 10%. Our intent is to recover the 10% but then move beyond that and replace more imports.”
However, the outlook for the second half of 2025 remains cautious, with domestic demand expected to stay constrained despite modest improvements in global steel sentiment.
The bottom line
What emerges from ArcelorMittal’s interim results is a portrait of an industry under siege – not just from global market forces, but from a perfect storm of policy failures, infrastructure collapse and regulatory inaction.
Verster’s message to the government is clear: “You cannot have these expensive rail and electricity costs and think manufacturing organisations can survive. Once again, it’s not a thing you see – you see the same issues in the smelters and ferro-alloys and others.”
His frustration is palpable. “This is not a crisis you can almost say is a South Africa steel issue. It’s not a steel issue. It’s an economic issue.” DM