Possible resolution close for ArcelorMittal labour dispute

The strike at ArcelorMittal SA (Amsa), Africa’s biggest steel manufacturer, may be terminated this week as unions and the JSE-listed company meet to thrash out details, signalling a possible end to the strike.

The National Union of Metalworkers of SA (Numsa), the country’s largest union, began picketing on Thursday at the Amsa facilities in Vanderbijlpark after it closed some plants, laying off at least 107 workers.

Speaking to Business Day, Numsa Sedibeng regional secretary Kabelo Ramokhathali said Amsa management and the union had been meeting to try to carve a path forward and resolve the protest action.

“The management met with the union after the first day of the industrial action on Thursday,” said Ramokhathali. “Parties are now exchanging notes with a view to settle the strike action by Monday.”

Amsa spokesperson Tami Didiza told Business Day on Sunday: “Both parties will issue a joint statement probably tomorrow [Monday].”

Amsa, which is charting a path back to profitability, cannot afford a strike. In October, it said it was considering asking shareholders for money while it looked for ways to fix its unbalanced financial structure after a further slump in performance in the third quarter.

The company has been grappling with a cocktail of tough headwinds hitting volumes — domestic overcapacity and persisting cost and price pressures have squeezed margins, compounded by weak GDP growth and low demand for steel as a result of the slow rollout of the government’s infrastructure plan.

The group's reported headline losses rose to R1.1bn in the six months to end-June from the R448m loss reported at the same time in the prior year. First-half performance was negatively affected by difficult local and regional trading conditions and the negative volume and direct cost effects of operational interruptions of the two blast furnaces at Vanderbijlpark.

Blast furnace chilled hearth conditions at Vanderbijlpark in April and May resulted in an earnings before interest, tax, depreciation and amortisation (ebitda) loss of R716m. Sales volumes were down 2% to 1.2-million tonnes with crude steel production falling 10%.

Amsa produces iron and steel, commercial coke and useful by-products in processes that sustain hundreds of thousands of jobs.

On July 2, Amsa signalled relief for thousands of workers when it declared that the longs business would remain open to give the short-medium and long-term initiatives aimed at securing its sustainability a chance to be fully explored.

Amsa’s stock took a knock on Wednesday, falling as much as 6% on the day the metal workers’ union announced it would go on strike to protest job cuts that had affected the 107 workers. It regained those losses on Friday, however, closing 5.60% higher at R1.32 on Friday — a far cry from the 2008 record high of R434.

With a market valuation of only R1.5bn, Amsa was formerly a favourite of the SA investing scene when energy rates were much lower. The share price has slipped 78% in the last three years.

Business Day reported that the group’s operations at its three plants across the country remained unaffected by the indefinite protest action, citing that a court order had barred employees who fall under business units covered by the maintenance determination from participating in any industrial action. 

An urgent application to stop industrial action for workers who fall outside the business units covered by the maintenance determination was heard on Friday.

The retrenchments come after Amsa and Numsa signed a three-year wage agreement in May 2023 for increases of 6.5% in the first and second years, and an inflation-related increase capped at 6.5% in the final year of the deal, effective from April 1 2023 to March 31 2026. 

Meanwhile, the company has vowed to continue work on advancing the high payback projects portfolio along with a funding solution which will also address balance sheet resilience.

gumedemi@businesslive.co.za
mkentanel@businesslive.co.za