Twice a year for the past decade, Vusumzi Nguse has walked down the potholed streets of his township to the pristine gates of the iconic century-old steel mill in the industrial town of Vereeniging to find work.
Now, the father of five fears he will join the roughly one in three South Africans without a job after ArcelorMittal South Africa, the continent’s largest steel producer, announced last month it would shutter its long steel plants in Vereeniging and Newcastle, along with its rail arm Amras.
“All of us living here came from outside to work there,” Nguse said, pointing to the giant blast furnace chimneys looming over the township’s rubbish-strewn fields. “My next move is I’ll just look for anything I can find. It’s just about surviving now.”
The fate of these plants will reverberate beyond a sector that, at its 1970s peak, was so productive that it enabled South Africa’s isolationist apartheid government to ride out global sanctions as it built the continent’s most industrialised economy.
Their loss — following years of stagnation, high costs, an influx of cheap steel imports from China, and now 25 per cent tariffs due to be imposed by US President Donald Trump — would mark a major blow for a coalition government that has made foreign investment a cornerstone of its economic strategy.
It could also sound the knell for South Africa’s already diminished manufacturing sector.
“It is impossible to overstate just how disastrous [the plants’ closing] would be for South African manufacturing,” said Justin Corbett, chief executive of Rand York, which uses the Newcastle mill’s steel to make products for export and is now mulling a move to India.
“Companies that rely on ArcelorMittal in the mining, rail and automotive sectors will either move offshore too, or wind down entirely.”
Along with the loss of work for the 3,500 people employed directly in the mills, the South African Iron and Steel Institute warned that a widespread domino effect could lead to the loss of up to 100,000 jobs, as the closures ripple through other industries.
Investor sentiment has improved dramatically since the market-friendly Democratic Alliance party joined the African National Congress in government following elections last year.
But convincing ArcelorMittal or other investors to keep the mills alive will be one of the first real tests of whether they can translate optimism into industrial revival.
ArcelorMittal last week received a R380mn ($20mn) loan from the government that will enable the company to continue operating the plants until the end of the month, while authorities search for ways to keep them open.
President Cyril Ramaphosa has vowed to turn the country into a “giant construction site”, proposing a R940bn investment plan to revive manufacturing, curb soaring unemployment and end more than a decade without per-capita economic growth in real terms.
ArcelorMittal’s plants in Vereeniging, which is 50km south of Johannesburg, and Newcastle, 300km east, were expected to play an important role in this revival, providing the long steel that is used in sectors like railways, construction and mining, an industry that built modern South Africa.
What is today ArcelorMittal South Africa was founded in 1928 by the apartheid government as the state-owned Iron and Steel Corporation. It became a behemoth in the 1940s, following a postwar reconstruction boom.
By the 1970s, it was a monopoly that was heavily protected and promoted by a nationalist government seeking to modernise the economy and boost South Africa’s white working class during a period when Afrikaners were predominantly poor and lived in rural areas.
Faeeza Ballim, a historian at the University of Johannesburg, said one of the company’s chief engineers at the time — who were almost universally white — summed up the mood as vasbyt, Afrikaans for “bite down” or forge ahead. The rapid industrial growth relied on Black labourers, too.
Privatised in 1989, the company was bought by Lakshmi Mittal’s conglomerate in a landmark deal in 2004, a decade after the election of the African National Congress brought the apartheid era to an end.
But in the years since, overall crude steel production has dwindled, falling from 6.4mn metric tonnes to 4.7mn metric tonnes in the decade to 2024. The share price of ArcelorMittal South Africa has fallen 97 per cent since Mittal bought the company, and it made a R5.8bn loss last year.
Global factors have also weighed on the industry. With China’s construction boom winding down, cheaper Chinese steel has flooded the South African market. Of the 4.1mn tons of steel bought locally last year, a third was imported, largely from China.
Trump’s tariffs, if introduced as planned in mid March, are likely to make matters worse, with major steel producers such as China expected to dump their supplies of the metal on global markets at even cheaper prices to compensate for the loss of business in the US.
News of the US steel tariff saw ArcelorMittal’s share price fall another 2 per cent on Tuesday. Its stock has already fallen by more than a third this year.
The steel sector has also fallen victim to many of the same problems that have plagued the rest of the country’s industries, including severe rolling blackouts and a dysfunctional rail and ports system, which hamstrung its exports.
Last year, ArcelorMittal South Africa’s chair, Bonang Mohale, blamed abysmal performance at the state-owned rail and port operator Transnet for the travails in the long steel business.
“The closure of once flourishing businesses such as [mills in Newcastle] and Vereeniging should serve as a clarion call for citizen activists demanding an end to inaction, inertia, corruption and misguided, even uninformed policy,” Mohale said.
In 2023, the company said Transnet’s poor performance cost it R1.4bn, as it was forced to use road transport to carry its steel, and pay higher demurrage charges in the congested ports.
In recent years, government policy that advantaged lower-quality steel made from scrap metal also undercut ArcelorMittal’s larger plants.
Ballim said successive democratic governments had struggled to keep the industry afloat “without that almost survivalist mode of the apartheid government that enabled it to really support” major state-owned companies.
Relations between ArcelorMittal and the government remain icy after reaching a low point in 2016 when the country’s competition watchdog fined the company R1.5bn ($81mn) for anti-competitive behaviour — the single largest penalty ever levied on a company by the antitrust authority.
ArcelorMittal South Africa’s chief executive Kobus Verster said at a news briefing last week that the company had told the government it would refuse “to carry any further losses”.
“We are not keen to invest new money into a sector that’s hostile and unattractive,” he added in an interview with the Daily Maverick.
Trade minister Parks Tau told the Financial Times the government would be “more active” in protecting the local steel industry. “It’s a strategic sector for us,” Tau said, adding: “Our investment in the energy network, our investment in the rail network, and in various pipelines means an increase in fixed capital investment, which does mean steel demand will increase.”
Observers are sceptical, however, that domestic demand will be strong enough to revive South African steel’s fortunes.
“You can only sell so much of your product into the local market,” said Charles Dednam, the head of the South African Iron and Steel Institute. “How do you get the rest of it to export markets if your rail infrastructure is falling apart?”
The workers in Vereeniging, meanwhile, watch to see if the government will find a solution that keeps the plant going. “I am just praying,” said Lehonololo Mokwena, a welder whose father and grandfather both worked at the mill. “There’s no other work in this town.”
