ArcelorMittal responds, says the mini-mill dream could melt down

Daily Maverick

2 days ago

ArcelorMittal SA has come out swinging against a recent Daily Maverick article that it says turned the national debate into a scrapyard brawl in favour of mini-mills and scrap metal traders.
In a sharply worded statement, ArcelorMittal South Africa (Amsa) claims Daily Maverick 'misrepresents the complex reality of South Africa's steel sector' and unfairly promotes 'a misleading narrative in favour of mini-mills and scrap metal traders, particularly those who benefit from importing cheap finished steel.'
The company argues that the journalist (me) presents mini-mills as a silver bullet and 'masks the vested interests of a small cohort of import-reliant firms', adding that the idea these facilities can simply replace integrated production is 'economically and technically untenable'. Cool.
Amsa's voice is strained by its terminal injuries — it's long steel business – slated for mothballing come the end of September 2025 – and a policy environment the company says leaves it no choice but to start winding down.
Depending on who you ask, the problem is either a failed state, a flawed business model, or both.
Long steel's long goodbye
Amsa has confirmed that unless a last-minute industrial miracle occurs, it will shutter its loss-making long steel operations at Newcastle Works, Vereeniging Works, and its rail-focused subsidiary.
The company says it has exhausted the R1.68-billion bailout from the Industrial Development Corporation (IDC) and 'cannot assume any further financial risks related to the Long Steel Business beyond the next few months.'
The closure directly threatens 3,500 jobs. But according to Elias Monage, president of the Steel and Engineering Industries Federation of Southern Africa (Seifsa), the ripple effects could be catastrophic: 'The signs of collapse are unmistakable. This is not just about a single mill – it is about an entire industrial ecosystem at risk.'
Monage's message is no longer merely a plea for urgent intervention. In a June statement, he called for a full-scale reset:
'South Africa's steel and engineering sector stands at a perilous crossroads. Years of deindustrialisation, declining production, job losses and a steady erosion of competitiveness have brought us here. This decline is not the result of chance, but a culmination of systemic policy failures, a lack of coordinated action and inadequate implementation of recovery frameworks.'
Dance if you want to dance
Monage once championed the Steel Master Plan as a roadmap for reindustrialisation. Now he concedes the plan has 'not lived up to its potential'. Instead of decisive action, he describes a 'diffusion and inaction' that left industry leaders disillusioned.
'The Steel Master Plan had over 20 workstreams and 73 deliverables, but it lacked focus. Progress stalled, and as it did, industry leadership began to withdraw,' Monage says.
The hard stats back him up: steel production remains 18% below its 2007/8 peak, capacity utilisation has slipped below efficiency benchmarks, and per capita steel consumption has dropped by 37% since 2013 – all while global steel intensity rises.
Monage argues that South Africa needs a new 'strategic agreement for impact,' a compact that binds government and industry to shared, measurable objectives like achieving 4-5% annual growth in metals and engineering output. 'Business as usual will not suffice,' he warns.
'This moment demands a bold shift – from fragmented policies and siloed departments to a unified national compact anchored in public-private collaboration.'
Let's play the blame game
National Employers' Association of South Africa (Neasa) CEO Gerhard Papenfus has long argued that Amsa's woes are self-inflicted, a product of propping up an uncompetitive giant. But Amsa doesn't think the one-time, self-appointed envoy to Washington, DC, is arguing in good faith.
'Though Neasa does not publicly disclose its membership, multiple sources including Neasa press statements and trade forums highlight its strong representation of steel traders and re-rollers with minimal domestic productive capacity,' the company said.
Amsa also countered that narrative directly. 'Mini-mills that can replace integrated primary steel production are economically and technically untenable,' the company insists. 'Mini-mills based on scrap cannot produce the full range of high-quality, flat and long products required by the automotive, mining, defence, renewable energy and construction sectors.'
The core argument is that the Preferential Pricing System (PPS) and export restrictions have cost informal workers and recyclers R60-billion over a decade, while propping up a few scrap-based mills employing only 5,000 people.
Government goes to the mat
'The PPS has not just failed; it has actively undermined the viability of integrated producers,' Amsa says. Worse still, it accuses mini-mills of gaming the system: 'Declining to purchase scrap at PPS-mandated discounts, only to subsequently call for tighter export controls to suppress prices further.'
The Department of Trade, Industry and Competition (DTIC) has admitted it is in 'firefighting mode,' with Minister Parks Tau's working group scrambling to contain the fallout.
But Monage is clear: 'Government must acknowledge that past interventions, however well-intentioned, have not delivered. Without leadership, clarity and decisive action, the socioeconomic consequences – more job losses, more factory closures, deeper erosion of capacity – will only deepen.'
Meanwhile, globally…
ArcelorMittal's global operations are booming. With Q1 2025 gross profit of $1.6-billion and strategic expansions in Liberia, India and the US, the global group is thriving while Amsa fights for its life.
The South African story remains bleak: rail failures labelled 'the worst performance on record', soaring energy costs and shrinking domestic demand. Even with a smaller loss expected this month, Amsa warns that 'without immediate policy coherence', integrated plants like Newcastle and Vanderbijlpark could become relics.
But Monage offers a final plea for collective ambition: 'No country can industrialise – or reindustrialise – without a resilient metals sector. Steel is the foundational input into mining, construction, transport, manufacturing, energy and agriculture. We must rescue the original intent of the Master Plan and build a future of inclusive, job-rich growth.'
At stake is not just the survival of one steel mill or one company. It's the question of whether South Africa can once again build things. DM