The closure of the Saldanha steel plant by ArcelorMittal SA has hit Kumba Iron Ore, which on Tuesday revised its 2019 sales guidance down slightly because of the loss of one of its clients. Expect more pain to follow as the domestic steel industry falters in the face of crippling power and other costs, putting paid to any dreams of industrialisation.
It did not take long for the ripple effects of the announced closure of Saldanha Works to spread through South Africa's fraying economic pipelines. ArcelorMittal South Africa (AMSA), the domestic unit of the global steelmaker, said on Monday that it was winding Saldanha down and that it would be put on care and maintenance by the first quarter of 2020.
The plant employs more than 500 people and the company's total workforce is 12,000. In July it said 2,000 jobs were potentially on the chopping block, so its restructuring is almost certainly not over. Indeed, AMSA said this was just the first phase of its asset review.
Kumba, of course, produces iron ore, the key ingredient for the steel that ArcelorMittal produces. Kumba, an Anglo American unit, said in a statement on Tuesday that:
"Following AMSA's decision to wind...