Steel producer ArcelorMittal South Africa (Amsa) has announced plans to retrench more than 50 employees as low demand, rising costs, a strong rand and South Africa’s sluggish economy necessitate further cost cutting measures. The company has said it would consult employees on the retrenchments, but labour unions have already stated their intention to oppose the job cuts.

In a statement, ArcelorMittal said it would explore several initiatives, including cost saving measures, assessing the profitability of various product lines and restructuring in the next six months. “All options are being explored and the company has no option but to also review its staffing levels,” the company said. The steel maker is the latest company to consider job cuts following Sibanye Gold and Anglogold Ashanti, which could affect a total of around 15 900 people.

‘We plan to hold serious talks with Amsa to discuss alternatives so that retrenchments would be considered as the last resort. We will do everything we can to prevent possible retrenchments,” says Marius Croucamp, the union’s Deputy General Secretary.

“I can promise you and workers we are going to do everything our power not to run away from engagement but to fight and oppose any form of job losses at Amsa,” National Union of Metal Workers (Numsa) General Secretary Irvin Jim told the media.

Wiim de Klerk ArcelorMittalArcelorMittal’s reported operating and headline losses increased by R714 million and R1.161 billion respectively for the first half of this year, as well as a 3.8% reduction in domestic steel consumption. The government’s planned tariffs on imported steel, while aimed at protecting the local industry, would not solve the company’s problems, CEO Wim de Klerk says.

“While we acknowledge and appreciate the steps already taken by government to protect the local steel industry, such as import duties, safeguards and the localisation of steel for state infrastructure projects, these will only assist in the medium- to long-term and, in the meantime, we must focus on the costs that are within our control in the face of this extremely challenging trading environment. Unfortunately, interventions implemented by the company to improve business performance have not yielded the required results and Amsa continues to face sustainability challenges,” he adds.

Other measures being evaluated by the company include procurement savings, commercial initiatives to enhance sales volumes, and short-term actions such as further productivity improvements. ArcelorMittal also stated that it is considering selling non-core assets and assessing its production footprint. In addition, the company has approached the National Energy Regulator of South Africa directly with a request for discounted electricity tariffs in order to reduce operating costs.

Image credit: http://annualreview2016.arcelormittal.com/action-2020/segment-review/acis


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