Global steel giants ArcelorMittal, has said that it could sack 2,000 – nearly a quarter of its employees in South Africa so as to cut costs
“A large-scale restructuring is contemplated, and it is anticipated that in excess of 2,000 positions may be affected,” ArcelorMittal said in a statement.
ArcelorMittal group is the world’s largest steelmaker and a total 8,800 workforce are currently in their employ in South Africa.
The planned employment cuts will certainly pile more pressure on the government of Cyril Ramaphosa which is currently battling a near record unemployment of more than 27%. And a weak economy.
So fat, several sectors have been affected by the economic downturn as South Africa’s banks, construction and the mining sectors have signalled mass layoffs as gross domestic product contracted by 3.2% in the first three months of 2019.
ArcelorMittal said that “due to the difficult domestic economic environment, the South African steel industry continues to face significant challenges.” Certain costs “that are not within the company’s control such as high electricity, rail, port, and primary raw material costs have contributed to these challenges,” it said.
ArcelorMittal — which supplies more than 70% of South Africa’s steel — said that it expects to turn in a loss for the first six months, triggering a sharp drop in its share price.
“Headline earnings for the period (are expected) to decrease by at least 650 million rand ($46 million) to a headline loss,” the statement said, noting that in the corresponding year-earlier period it booked a profit of 54 million rand.
The steelmaker is scheduled to publish detailed first-half results next month.
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