Impact of ArcelorMittal (lockdown) on community
As the nation woke to a crucial week in the Corona virus war, the Vaal faced further economic meltdown over and above lockdown as ArcelorMittal SA announced it had reached near-total shutdown of its iconic Vanderbijlpark plant - the largest in Africa.
The move is also expected to ignite a further round of contractor reductions by the company in addition to massive losses to the local economy through dramatic salary cuts for AMSA employees.
AMSA said it will now also start another round of intensive cost-cutting measures, but the company statement did not directly allude to further employee retrenchments, only referring to downsizing of contractors.
The Vaal region – already struggling socially, economically and with service delivery under a crippling river and community sewage pollution crisis, greatly overpriced and inflated residential and business electricity billing – now also loses huge salary cash injections into the local economy.
The Golden Triangle Chamber of Commerce (GTCoC) has already warned of the toxic health, social and economic impacts unleashed by existing crises in the Vaal and pushed to tipping point by lockdown and its consequences.
ArcelorMittal SA confirmed over the weekend that salaries – especially those of management – of thousands of employees in the Vaal – the core e of South Africa’s steel industry – were slashed with other company sites down to between 40 and 45% of normal pay from April.
Although AMSA said the salary cuts would hopefully last for only three months, a more than 50% reduction of cash inflow into the regional economy is a shattering blow in combination with already-existing business, governance and pollution crises.
Past assessments estimate the company and its supply and procurement chains form up to 35% of the local economy. However, AMSA’s economic footprint in the Vaal has been declining rapidly over the past decade with recurring retrenchments and downsizing.
Africa’s largest steelmaker last week issued a force majeur notice – absolving the company of the legal obligation to pay its bills under extra-ordinary circumstances beyond anybody’s control – last week to appropriate service providers.
However, AMSA would continue paying its municipal bills, said Tami Didiza, Group Manager Stakeholder Management and Communication.
But it was the official confirmation over the weekend of shutting the company’s huge production furnaces in Vanderbijlpark – a process initiated in the days since lockdown – that drove home the seriousness of both the Corona virus situation and the company situation.
AMSA said up to 95% of its customers were in lockdown anyway, thus making the present situation inevitable.
Sources said the steel giant’s management agonised over the the decision on both shutdown and slashing of salaries in full understanding of all the impacts for employees, contractors and the region before being forced to take the momentous step.
But one coke battery remains under operational hot idling conditions to kick-start production and iron-making whenever lockdown is lifted, the company said. Adding most employees were already at home apart from critical maintenance teams.
