Steelmaker restructures as Covid-19 bites into its bottom line
As the South African steel industry continues to face significant challenges, the impact of Covid-19 has led ArcelorMittal to consider strong measures to ensure that its costs are adjusted in step with low steel demand.
While the full extent of the impact of the Covid-19 pandemic still remains uncertain as the economy slowly reopens within government’s risk-adjusted approach to the easing of lockdown restrictions, the various lockdown regulations have, to date, had a material negative impact on the steelmaking business.
Further, the Company anticipates that it will take some time for crude steel production levels to return to historical levels or planned levels of 2020. Therefore, a significant part of the Company’s available production capacity may remain unutilised for an extended period.
Consequently, the cost-saving initiatives previously implemented will not be sufficient and the unexpected impact of Covid-19 has led the Company to consider further measures to ensure that its cost base is adjusted in line with lower anticipated demand.
ArcelorMittal will be commencing with a consultation process in terms of Section 189(3) of the Labour Relations Act 66 of 1995. A large-scale restructuring is contemplated, and the number of jobs impacted will depend on the alternatives identified and agreed to mitigate the impact. The final outcome and number of positions affected is subject to a formal consultation process.
The Company will continue to engage with organised labour and employees to consider alternatives to minimise the impact.
