Business

ArcelorMittal the latest to add to SA’s jobs blood bath

2019-07-14 16:08

South Africa’s unemployment rate is set to rise, with news this week that the country’s largest steel maker is planning to cut jobs, adding to thousands that have been cut so far this year.

ArcelorMittal SA this week announced that it could embark on a large-scale restructuring where in excess of 2 000 positions might be affected out of a total workforce of 8769.

These potential job losses come amid a contraction of the economy in the first quarter of the year.

The steel maker said the South African steel industry was facing significant challenges owing to the difficult domestic economic environment.

“Certain costs that are not within the company’s control, such as the high cost of electricity, rail, port and primary materials, have contributed to these challenges,” the company said.

“Accordingly, ArcelorMittal SA has embarked on several initiatives to improve efficiencies and address expenditure that is within its control.

“However, these cost-saving initiatives will not be sufficient. More significant measures have become necessary, including the review of staffing levels, together with other interventions.

jobs

“A large-scale restructuring is contemplated, and it is anticipated that in excess of 2 000 positions [full-time equivalents] may be affected. The final outcome and number of positions affected is subject to a formal consultation process,” the steel maker said.

It expects to report a loss in the first half and said earnings excluding some items would fall by at least R650 million.

Its shares tumbled by as much as 17% this week, the biggest intraday drop in 14 months.

The company, which is majority-owned by ArcelorMittal, the world’s biggest steel maker, has been struggling with weaker demand and lower steel prices in its key markets.

It announced output cuts in Europe last month as the market came under pressure, with US tariffs deflecting shipments to the EU and higher iron ore prices boosting costs.

“Accordingly, ArcelorMittal South Africa has embarked on several initiatives to improve

efficiencies and address expenditure that is within its control,” the steel maker said.

“However, these cost-saving initiatives will not be sufficient. More significant measures have become

necessary, including the review of staffing levels, together with other interventions,” the ArcelorMittal said.

“A large-scale restructuring is contemplated, and it is anticipated that in excess of 2 000 positions (full time equivalents) may be affected. The final out-come

and number of positions affected is subject to a formal consultation process,” the steelmaker said.

It expects to report a loss in the first half and said earnings excluding some items will fall by at least 650 million rand.

The shares tumbled as much as 17% this week - the biggest intraday drop in 14 months.

The company is majority owned by ArcelorMittal, which ranks as the world’s biggest steelmaker and has been struggling with weaker demand and lower steel prices in its key markets.

It announced output cuts in Europe last month as the market came under pressure, with US tariffs deflecting shipments to the EU and higher iron ore prices boosting costs.

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December 8 2019