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ArcelorMittal's South African division plans to cut more than 2,000 jobs as part of a large-scale restructuring, warning that its half-year results will fall.
The company pointed out that the high costs of electricity, railways and raw materials, as well as cheap imports, created a "difficult domestic environment" for the steel industry.
The company expects a net loss of at least R 650 million ($ 45.78 million) from this period, which would plunge it into a loss and result in lower earnings per share. at least 59 cents, according to a trading statement released Wednesday. The company's share price fell 8% to 319 rand early in the morning.
The news comes amid a slowdown in South Africa's economy, which is experiencing its worst quarterly recession in a decade, putting pressure on President Cyril Ramaphosa to resurrect the country most industrialized continent.
"More important measures have become necessary, including the review of staffing levels, as well as other interventions," ArcelorMittal said in a statement.
Like other heavy industries in South Africa, the local ArcelorMittal unit faced earlier severe power outages imposed by Eskom, the energy monopoly of the country struggling with a financial crisis.
The lifting of steel and aluminum tariffs by the US government for Canada and Mexico has also affected South African steel producers.
"These manufacturers are in dire straits as exports to the US are drying up fast," Solidarity said in South Africa last month.
This is not the first time that the South African steel mill Lakshmi Mittal is under financial pressure. In 2015, he received a government bailout to prevent the closure of factories in cities whose economies rely heavily on steel.
The end result of the large-scale restructuring is subject to a formal consultation period.
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