SACP Memorandum To Arcelormittal South Africa

TO: The Chief Executive Officer, ArcelorMittal South Africa

FROM: The South African Communist Party (SACP)

DATE: 7 February 2025

SUBJECT: Immediate reversal of plant closures, and demand to restart Saldanha Steel Mill Production

1. Introduction

The South African Communist Party (SACP) submits this memorandum to demand an immediate reversal of ArcelorMittal South Africa's (AMSA) decision to close domestic steel manufacturing plants, including the Newcastle Works, Vereeniging Works and the eMalahleni rail-fabrication plant. In addition, the SACP calls for the urgent restart of production at the Saldanha Steel Mill. If AMSA is unwilling or unable to sustain operations, we demand that these facilities be handed over to the state for alternative ownership and operation to ensure continued production in the national interest.

2. Background and Context

AMSA, formerly the state-owned Iscor, was privatised starting in 1989 under the apartheid regime and fully privatised in the early 2000s. This privatisation has proven to be a failure, leading to significant de-industrialisation and foreign control over strategic industrial assets.

AMSA's decision to mothball and close facilities threatens over 3,500 direct jobs and an estimated 25,000 to 100,000 livelihoods within the value chain, including in metal and engineering industries and the automotive component manufacturing sector. These reckless profit-driven decisions undermine South Africa's industrial base, perpetuate unemployment and betray the working class and the nation.

3. Key concerns

3.1 Economic and social impacts

• The closure of these facilities will badly affect workers, their families and communities, further deepening South Africa's unemployment crisis, with over 12 million individuals already unemployed or discouraged work seekers.
• Enterprises dependent on AMSA's steel products, including automotive component manufacturers and the metal and engineering industries, risk closure, short-time work and layoffs, or reduced production.
• The decision perpetuates manufacturing de-industrialisation, undermining domestic value addition and beneficiation of mineral resources.

3.2 Privatisation failures

• The privatisation of Iscor failed to deliver on promises of increased investment and technology transfer and continued production, all under the profit-driven yoke of the foreign-controlled AMSA. Instead, it led to asset sweating and facility closures.
• The shutdown of Saldanha Steel in 2020, with over 1,500 retrenchments, remains a stark example of the privatisation failure, and so will the closure of the Newcastle and Vereeniging steel manufacturing plants and the eMalahleni rail fabrication plant.

3.3 Anti-developmental practices

• AMSA's use of import parity pricing has made its domestic steel products unaffordable, further undermining local industries, abusing dominance and monopoly.
• While export tariffs on scrap metals and the Preferential Price System have supported local foundries and employment, AMSA has resisted these vital industrial policy measures. Your company must stop the unreasonable demand.

3.4 Environmental sustainability

• AMSA's failure to invest in low-carbon production technologies undermines the sustainable future of South Africa's steel industry.

4. Demands

4.1 Immediate reversal of plant closures

• AMSA must immediately reverse its decision to mothball and close the Newcastle Works, Vereeniging Works and the eMalahleni rail-fabrication plant with immediate effect.

4.2 Restart production at Saldanha Steel Mill

• AMSA must restart production at the Saldanha Steel Mill to revitalise domestic steel manufacturing and create employment opportunities, or it must hand over this facility to the state for alternative ownership and operation. The shutdown of this facility in 2020 was a grave error that must be corrected.

4.3 Transfer of ownership to the state

• If AMSA is unwilling or unable to sustain operations, it must transfer ownership of the affected facilities to the state. This "reverse privatisation" would ensure their continued operation in the national interest and align with the state's industrialisation strategy.

4.4 Support for industrial policy measures

• AMSA must actively support industrial policy instruments such as export tariffs on scrap metals and the Preferential Price System, which are critical for sustaining local steel manufacturing and it must forget about and never return to the parasitic, exploitation practice of import parity pricing on domestically produced products.
• Invest in mini mills using electric arc technology to produce affordable steel with a lower carbon footprint.

4.5 Environmental responsibility

• AMSA must embrace investment in low-carbon steel production technologies to secure a sustainable future for the industry and it must rehabilitate all the areas destroyed by its environmental degradation in the Vaal region and everywhere else it has done this in the country.

5. Call to Action

The SACP urges AMSA to act responsibly by prioritising the livelihoods of South Africans, the preservation of the country's industrial base and the sustainability of the domestic steel industry. Should AMSA fail to reverse its decisions, the SACP will mobilise its structures, workers and communities in Newcastle, Vereeniging, eMalahleni, and beyond to take militant action to protect these vital facilities and the national interest, including through RE-NATIONALISATION.

6. Conclusion

The SACP calls on AMSA to urgently reverse its plant closure decisions, restart the Saldanha Steel Mill, or engage with the state to transfer ownership of the affected facilities.

The SACP will continue to monitor this situation and engage all relevant stakeholders to ensure that the interests of the working class and the nation are upheld.

We demand a response within three consecutive days given the urgency of this matter.