The South African automotive industry is urgently appealing to ArcelorMittal South Africa (AMSA) to postpone the planned closure of steel mills in Newcastle and Vereeniging. Set for closure this month, the shutdown of these mills poses a significant threat to the country’s automotive sector, potentially leading to plant closures and job losses.
Leading associations representing automotive component makers and car manufacturers, including Volkswagen AG and Toyota Motor Corp, have addressed letters to the trade minister, requesting an extension of at least one year to source alternative steel supplies. The closure of the mills, which produce essential long-steel products, would impact a range of industries, from construction to mining and automotive manufacturing.
AMSA has cited financial difficulties, poor rail service, high electricity costs, and an influx of low-cost imports as reasons for the mill closures. The associations are calling for a transitional solution to prevent severe disruptions and mitigate the risk of de-localization and de-industrialization.
Without a reliable local steel supply, the automotive industry could face line stoppages, plant closures, and reduced production volumes, jeopardizing the sustainability of component suppliers and original equipment manufacturers. Additionally, steel imports could be up to 25% more expensive, further straining local supply chains.
Employing over 116,500 people directly, the automotive industry is a significant contributor to South Africa’s GDP and export revenues. Any decline in the industry’s cost competitiveness would directly affect its ability to compete in global markets.
As discussions continue, the automotive sector eagerly awaits a government decision on a potential solution to this pressing issue.
