The decision has been made after an operational review, with the group concluding that Saldanha has lost its structural competitive cost advantage, due mainly to high raw material costs and regulated prices, reports Business Live.
The process of winding down Saldanha’s steel operations to a state of care and maintenance will begin immediately and is expected to be completed during the first quarter of 2020, the company said.
The plant was commissioned in 1998 and has a capacity of about 1.2-million tons annually.
“This difficult decision was taken in the context of constructive ongoing engagements with key stakeholders, including government and organised labour, to find alternative solutions to the dire situation in the South African steel industry,” the company said.
Contractual domestic sales orders from Saldanha will now be fulfilled from the Vanderbijlpark Works, it said.
The group has previously said it was battling low selling prices, weak domestic demand and rising raw material costs. It was also facing expensive electricity, rail and port costs.
The group has about 12,000 employees, saying in July it was entering restructuring talks with employees, with more than 2,000 jobs on the line.
On Monday morning the company’s share price was unchanged at R1.71, having lost 49.51% in the year to date.
