ArcelorMittal CEO Kobus Verster warns of 80,000 job fallout without government action

On BizNews’ 12th birthday, Alec Hogg speaks with ArcelorMittal SA CEO Kobus Verster about the possible shutdown of its Newcastle steel plant. With 80,000 jobs at stake and Transnet, Eskom, and scrap metal policy failures bleeding the company dry, Verster says the IDC and government must act by 30 September or risk a social and economic disaster. The steel boss lays bare South Africa’s crumbling industrial backbone - and offers a last-ditch plan to save it.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..Watch here.Listen here.BizNews Reporter.As South Africa battles economic stagnation and deep infrastructure decay, one of its last heavy industrial pillars teeters on the brink. Speaking to Alec Hogg on BizNews' 12th birthday, ArcelorMittal SA CEO Kobus Verster delivered a stark message: if government doesn’t step in by September 30, the company will shut down its Newcastle plant, a move that could impact up to 80,000 people across the steel value chain.“We’ve been losing billions trying to keep longs running,” Verster said. “We simply cannot do it any longer. The IDC has funded us to that deadline. If nothing changes, we stop.”The root causes? Verster didn’t sugarcoat it. Eskom, Transnet, failed policy enforcement, and a 35% scrap metal discount for competitors have created an unworkable operating environment for the long steel division, which feeds South Africa’s construction and infrastructure sectors. "This is not just a steel problem. It’s an economic crisis," he said.ArcelorMittal’s most recent results reflect the toll: a billion-rand loss in the last six months, with steel prices at historical lows and domestic demand down 18% over the last 17 years. Yet somehow, the company is still cash flat, thanks to cost-cutting, asset sales, and resetting working capital.The Newcastle plant has already survived two shutdown attempts. Now, Verster says the line is firmly drawn: “You’ve got to start closing down by early August to meet a September 30 stop. That’s the hard deadline. Unless someone steps in, this time it’s real.”A Broken Industrial ChainThe Newcastle operation, focused on long products, is particularly exposed. Unlike the flat steel division that serves automotives and appliances, the longs business is tied to construction, a sector crippled by low growth, municipal dysfunction, and collapsing infrastructure.Verster paints a grim logistical picture: 370 trucks a day bring in raw materials because rail service has failed. "Our plants are designed to tip trains onto conveyors. Now we offload by hand with yellow machines. It’s a complete reversal of how it’s supposed to work."The scrap metal pricing regime is equally absurd. Competitors using electric arc furnaces benefit from a massive government-endorsed discount, effectively subsidised by Newcastle. “Why must we pay for Transnet's failure, Eskom’s pricing, and the scrap discounts handed to others? It’s not sustainable,” he says.80,000 Jobs on the LineThe direct workforce at Newcastle is around 3,500. But Verster warns that the real impact is far deeper: small manufacturers, component producers, supply firms, and community businesses like B&Bs and crèches all rely on the plant.Government knows this. “They’ve done the social cost numbers. It’s more expensive to let Newcastle fail than to support it,” Verster argues. “But they’re slow. Very slow.”Best-Case and Plan BThere is still a path to survival. Lower Transnet tariffs, a fairer scrap discount, and reasonable Eskom pricing could help the plant break even, especially if volumes recover in the medium term. But if that doesn't materialise, Verster says the company has a contingency.ArcelorMittal plans to sell off non-core and long steel assets, using proceeds to shore up its core flat steel division and reduce debt. He points to Saldanha Steel, a mothballed site that could be converted into a low-cost, green hydrogen DRI asset, as a key strategic play.“The flat business is solid. We’ve just been bleeding from longs. It’s time to stop that leakage,” he said.No More Time to StallIf the IDC or government want to keep Newcastle alive, they must act now - and with real money. “We’ve told them clearly. If you want us to run until November, fine - but then you fund the losses. We won’t put the whole company at risk anymore.”Pressed on whether he'd work with the IDC or government if they offered a lifeline, Verster was clear: “We’re open to anything. We represent shareholders, the company, and South Africa. But any solution must be fair. We can’t be the ones paying for everyone else’s failures.”A Broader MalaiseThe conversation with Verster is sobering not just for what it says about steel, but about the state of South Africa’s economy. Core infrastructure entities, Transnet, Eskom, the DTIC, have either failed or moved too slowly to support industry. And the legacy of corruption, especially the Gupta years, still haunts the system.Hogg noted the irony: “The dots are never joined. The Guptas looted billions, but now we’re asking private companies to carry the cost of that damage.”Verster agreed: “You’re right. It’s not just our crisis. Look at Ferrochrome. Look at smelters. They’re all closing. We’ve got the raw materials, but we can’t produce.”

ArcelorMittal CEO Kobus Verster warns of 80,000 job fallout without government action

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