ArcelorMittal's South African division announced on Tuesday that it will not proceed with the planned closure of its steel plant in KwaZulu-Natal. Instead, the company is developing a plan to make the plant viable, reversing a decision made more than six months ago. This announcement comes as the company anticipates wider losses due to challenging market conditions and disruptions at its Vanderbijlpark furnaces.

Following the trading update, ArcelorMittal South Africa's Johannesburg-listed shares dropped by 12.1% by 10:04 GMT. The company expects to report a headline half-year loss per share between 0.96 rand and 1.04 rand, compared to a headline loss of 0.40 rand per share in the same period last year.

The decision to maintain operations at the long steel plant, which produces fencing material, rods, and bars for construction, mining, and manufacturing sectors, will save 3,500 direct jobs and thousands more indirectly. CEO Kobus Verster stated in a media call that the company had delayed the closure in January to engage with government and labour to resolve profitability issues and prevent job losses.

ArcelorMittal South Africa noted improvements in electricity generation and port and rail efficiencies. The company also highlighted that the non-renewal of a steel scrap export ban, which expired in December 2023, had begun to level the playing field between integrated steelmakers and scrap-based producers.

Additionally, the company has secured a 1 billion rand ($54.29 million) working capital facility to support ongoing operations. This financial backing aims to assist the company in navigating the tough market conditions and ensuring the sustainability of its operations in the long term.

The board and management have decided to continue operations to fully explore short, medium, and long-term initiatives for sustainability, according to a company statement. The initial decision to close the plant in November was attributed to weak demand and infrastructure challenges in South Africa. The company had also criticised policies that favoured scrap metal over iron ore in steel production.

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