Two thousand jobs are expected to be affected in Newcastle alone. (Photo supplied)
The year started on a grim note for Newcastle in KwaZulu-Natal as the impending closure of ArcelorMittal South Africa’s (Amsa) operations threaten to plunge the region into an economic crisis.
Thousands of jobs are on the line, and the ripple effects are expected to devastate livelihoods, businesses and the broader Newcastle economy.
With approximately 3 500 jobs affected nationally, including 2 000 in Newcastle alone, the closure of Amsa’s long steel operations is a harsh blow to a community where nearly every family is connected to Amsa, directly or indirectly.
“In Newcastle, you can stop and speak to almost anyone on the streets, and they will either have worked for Amsa or know someone who has,” said Morné Seaman, president of the Newcastle Business Chamber.
KwaZulu-Natal MEC for Economic Development, Tourism and Environmental Affairs (Edtea), Musa Zondi, has called for urgent intervention to address the closure of the plant belonging to world’s second-largest steel producing company, which also operates in Vereeniging.
“The closure of Amsa’s Newcastle and Vereeniging operations could devastate the local economy, leaving thousands without work and negatively impacting regional suppliers.
“Furthermore, if this is not resolved, it will have a ripple effect on the broader economy of KwaZulu-Natal, threatening economic stability and growth in the province.
“We urge the minister of Trade, Industry and Competition [Parks Tau] to explore all possible solutions to prevent this closure, including further dialogue with Amsa and stakeholders,” Zondi said.
The company said on Monday that it has taken the decision to wind down the longs (which includes steel) business after sustained challenges, including weak economic growth, high logistics and energy costs, and an influx of low-cost steel imports, particularly from China.
CEO Kobus Verster said despite extensive consultations with the government and stakeholders to find viable solutions to sustain the longs business, there was insufficient progress to avert the closures. Steel production is likely to stop this month.
According to Seaman, in 1969, the government announced the establishment of the third Iscor Works in Newcastle, now known as Amsa.
As a direct result of Iscor’s presence, Newcastle rapidly developed into an industrial town and became a key growth point in Northern Natal.
Iscor served as a cornerstone for Newcastle’s transformation into a sustainable business hub in Northern Natal, he said.
He said the most significant impact would primarily affect logistics companies, engineering businesses and downstream companies that rely on the byproducts for manufacturing their products.
“The factors that led Amsa to make this decision are well-known, and many of these challenges also affect other businesses in and around Newcastle. Unless the government and businesses engage in meaningful dialogue with a commitment to implementing agreed-upon outcomes, more and more manufacturing, textile, and other industries will cease to exist.”
Seaman said the impact on Amsa employees will be the most profound — the prolonged uncertainty surrounding the potential closure of Amsa Newcastle must have taken a tremendous toll on the employees and their families, he said.
“With unemployment already at a high level, many long-serving employees will face significant challenges in finding new employment. Unfortunately, Newcastle lacks large towns or cities nearby where residents could commute for work. Consequently, families may be forced to leave the area in search of better opportunities. This migration will likely trigger a ripple effect, impacting property prices, retail businesses and the broader local economy.”
Seaman said he hoped this development, as devastating as it may be, will serve as a catalyst for open and constructive dialogue between businesses, the Newcastle Local Municipality and the provincial government.
“As the Newcastle Business Chamber (Sakekamer), we stand ready to facilitate these essential conversations, working collaboratively to identify solutions and foster positive outcomes for our community,” he said.
Zondi has written to the Minister of Trade, Industry and Competition, Parks Tau, requesting further engagement to address the impending crisis.
“As one of the largest employers in the region, Amsa’s operations have long been a pillar of economic stability, supporting thousands of workers and local suppliers,” the department said in a statement.
This article was first published by The Witness.