ArcelorMittal South Africa’s shares fell by almost 14% after the steel company announced plans to shutdown operations due to a lack of demand and infrastructure issues.
As a result, the company may have to let go of 3,500 employees.
At the close of business on Tuesday, the share price was down by 15% and traded at R1.16 per share.
The share price bounced back minimally, trading at R1.18 at 8.30am on Wednesday.
Looking at the share price of ArcelorMittal South Africa over a one year period, it has not fared well and has been down by 74.24%.
The company said that over the last seven years demand for its steel products fell by 20%.
According to their statement, they are also impacted negatively by load shedding and the country’s rail issues.
"In the circumstances, the ArcelorMittal South Africa board and management have had no option but to embark on a process that contemplates the wind down of the company's Longs Business, which for now may be placed in care and maintenance," ArcelorMittal said.
The 3,500 jobs loss will be felt at its Newcastle and Vereeniging steel manufacturing operations.
10,000 JOBS COULD BE LOST IN THE MINING SECTOR
Last week, the National Union of Mineworkers (NUM) said the country could face major job losses in the coming months.
The union said that it was shattered and disappointed by the high levels of possible job losses due to retrenchments in some of the companies, in particular mining.
“To this date, close to 10,000 jobs stand to be lost between now and January 2024,” NUM said.
This is a huge blow, according to the union, given how much unemployment the country is facing.
A number of precious mental mining companies have been looking at cutting thousands of jobs in SA.
Anglo American Plc has been mulling the fact that they have to reduce their employment capacity.
In October, Sibanye-Stillwater said that given the metal price decline, they could let go of four of their mines that are not making a profit, and this could lead to more than 4,000 jobs being cut.
In September, the mine said that it had initiated a Section 189 process with unions at its Kloof 4 shaft in Carletonville.
The mine said that close to 3,000 jobs were on the line.
That means that more than 7,000 jobs could be lost at just one mining company.
On Monday, Wesizwe Platinum said it is planning to restructure its “bloated” Bakubung mine in the North West.
Wesizwe Platinum has 761 staff members at the Bakubung mine, and 571 employees could lose their jobs.