ArcelorMittal South Africa could retrench as many as 2 500 employees, according to the labour unions represented at the company.
Africa’s largest steel producer announced in June that it would begin to implement a section 189 process after its initial cost-cutting measures were inadequate to insulate it from a weak economy and the economic effects of the Covid-19 pandemic. At the time, it did not specify the number of employees who would lose their jobs.
During discussions held with labour unions at the beginning of this month, the company disclosed that it aims to cut its 9 500-strong workforce by 2 500.
The proposed retrenchments include 1 500 positions that were part of its Strategic Asset Footprint Review, which saw the winding down of operations at its steel operations in Saldanha in the Western Cape.
The plan to cut jobs follows the company’s announcement that it would be restarting the second blast furnace at its Sedibeng operations in January 2021 in response to an increase in demand for steel in South Africa.
Restarting these operations would add about 600 000 tonnes to annual flat steel production volumes, the company said in a statement. The company expects demand for steel to increase over the next few months, which means “exports will be required for some of the additional volume”.
The temporary closure of the steel producer’s Sedibeng operations came on the back of the company’s dismal half-year performance at the end of June. In a trading update, the company reported a headline loss of R2.6-billion, from R638-million in the previous year.
The company said it expects steel demand to remain between the 70% to 75% levels planned before the lockdown, prompting it to implement the section 189 process.
Unions have welcomed the move to reopen the operation after months of inactivity as a result of the lockdown and the drop in demand for steel. But the future of workers at the Sedibeng plant remains unclear. During the meetings with unions last week, the company did not indicate whether the workers at the furnace would be reabsorbed.
ArcelorMittal’s general manager for stakeholder relations, Tami Didiza, said: “The company has submitted various alternatives to retrenchment to the consulting parties that could potentially reduce retrenchment numbers.”
According to Solidarity’s Willie Venter, the company’s other 1 000 planned job cuts come as the steel producer plans to reduce its input costs to cushion itself against the economic blow of the pandemic and the subsequent significant decrease in demand for steel.
ArcelorMittal and trade unions are expected to meet at the negotiation table today. Venter said they will propose alternative ways to cut the company’s input cost apart from retrenchments, including “some intervention from the government regarding [the high cost] of electricity and transport”.
If these proposals are accepted by ArcelorMittal, then there is a possibility that up to 1 000 positions across the company’s divisions could be saved.
The National Union of Metalworkers (Numsa) has accused the steel producer of negotiating in bad faith.
The union’s regional secretary in Sedibeng, Kabelo Ramokhathali, says the company should reduce the number of employees it intends to retrench because it is restarting its operations in the region.
Numsa has put forward various proposals to reduce the number of retrenchments. Ramokhathali said that the company’s alternatives were “that they want to cut the hourly rate for the non- permanent employees.”
He added that another proposal by the union would be to see the government providing temporary relief by paying a portion of the company’s salary bill similar to the Unemployment Insurance Fund’s Temporary Employer-Employee Relief Scheme. But ArcelorMittal has rejected these proposals, according to Ramokhathali.
He said the negotiations are expected to continue until the end of October.
*This story has been updated to reflect comment from Numsa regional secretary Kabelo Ramokhathali
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian