01/17/2025 | Press release | Distributed by Public on 01/17/2025 06:05
Friday, 17 January 2025: - The South African Communist Party (SACP) called for and unequivocally supports the intervention by the Minister of Trade, Industry and Competition, Parks Tau, aimed at halting ArcelorMittal South Africa's (AMSA) plan to mothball its domestic steel mills, shut down production and retrench workers. AMSA's closure of the South African steel mills would have devastating consequences for workers, communities and the broader economy. Preventing AMSA's end-of-January 2025 planned shutdown of the long-steel mills in Newcastle and Vereeniging and the rail-fabrication plant in eMalahleni must be treated as a matter of national urgency.
The SACP Economic and Social Transformation Commission, meeting on Thursday night, 16 January 2025, highlighted the grave risks posed by AMSA's profit-seeking at-all-cost decision. Should AMSA proceed with its reckless plan to close the Newcastle and Vereeniging long-steel production facilities and the rail-fabrication plant in eMalahleni, the ripple effects will be catastrophic. There are enterprises in other sectors, such as the automotive component manufacturing sector, that are heavily dependent on AMSA's steel products.
Some enterprises in different segments of the metal and engineering industries, as well as in the automotive component manufacturing sector, that depend on supplies from AMSA, have already signalled their own potential closures. Others have signalled a switch from active production to short-time work and layoffs as they scramble to find alternative supplies. These alternative supplies include the substitution of locally produced supplies with imports. AMSA's decision will perpetuate manufacturing de-industrialisation and force down domestic manufacturing value addition in South Africa.
Its immediate impact would directly affect 3,500 workers. In the medium- to long-term, the fallout could put an estimated 25,00 to 100,000 livelihoods at risk. This is a direct assault on the working class and a damning indictment of the neo-liberal privatisation agenda that led to this crisis. The closure of domestic productive capacity will also negatively impact the national imperative of industrialisation, including increasing domestic beneficiation of our mineral resources and manufacturing employment.
AMSA, once the state-owned Iscor, was privatised under the guise of "efficiency" and "competitiveness" beginning in 1989. It was later unbundled, separating steel production from mining, with the privatisation completed in the early 2000s, including the private takeover of the Industrial Development Corporation's equity in the Saldanha Steel Mill. AMSA shut down and mothballed Saldanha Steel Mill in 2020, resulting in the retrenchment of over 1,500 workers. New efforts are required to resuscitate this facility and restart production as part of the national industrialisation and employment creation imperatives. We must draw lessons from our experience in our efforts to industrialise and advance the right of all to work through large-scale employment initiatives.
What this privatisation failure underscores is that the takeover of public enterprises by foreign owned monopoly corporations does not always lead to an injection of new investment and technology, as its proponents would have us believe. It can just as often, as in this case, result in sweating of existing assets followed by closure and replacement of domestic production by imports from elsewhere in their global value chains.
Today, we are witnessing the catastrophic consequences of privatisation - a betrayal of the people in favour of private profit seeking at all costs.
Beyond the urgent imperative to stop the closure of the domestic steel mills and manufacturing by AMSA, the state must start to explore public ownership options, including reclaiming a significant to a controlling and full stake in the productive capacity. This is not just an economic imperative but a matter of national security to ensure the survival of domestic steel production and supplies to other manufacturing, such as the manufacturing in automotive components sector, metal and engineering industries. Such a transition must also embrace investment in low-carbon production technologies to secure a sustainable future for the industry. The SACP has long been campaigning for these measures.
The state must not abandon critical industrial policy instruments, such as the Preferential Price System and export tariffs on scrap metal. These measures are essential to ensure that the scrap metal resource "above the ground" is transformed into value-added products, including reasonably priced long steel products. They have also facilitated the emergence of mini mills using electric arc technology, which can produce more affordable steel with a lower carbon footprint. These initiatives are crucial for building a more productively capable and diversified steelmaking industry.
Decisive action must also be taken against the illegal "scrap metals and trade", particularly the looting of public infrastructure and theft. Calls to dismantle such measures are unreasonable and must be rejected outrightly.
The SACP will not stand idly by. We will mobilise our structures, workers and communities in Newcastle, Vereeniging, eMalahleni and beyond to take militant action against AMSA's plans.
Issued by the South African Communist Party,
Founded in 1921 as the Communist Party of South Africa.
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