The potential closure of South Africa’s leading steel manufacturer ArcelorMittal’s long-steel plants in Vereeniging, Gauteng, and Newcastle, KwaZulu-Natal, could not only jeopardise the livelihoods of employees but also poses a long-term threat to the survival of the larger steel sector and the economy.

While ArcelorMittal initially announced the closure of its long-steel plants in January, the decision was delayed by a month to allow for continued engagement with government. A decision was expected by the end of this month.

Labour law solutions company Labournet director and Labour Court Acting Judge Sean Snyman highlights several negative implications of the closure of ArcelorMittal’s long-steel plants.

Firstly, he says the retrenchment of workers at the steel plants triggers Section 189 and 189A of the Labour Relations Act (LRA), which protect the livelihoods of employees by creating a structured retrenchment process.

He notes that Section 189A could prolong the retrenchment process, owing to its complexities, such as negotiation, consultation and mitigation mechanisms, which could result in employees “put[ting] up a lengthy fight” before being fully retrenched.

The law enables steelworkers to challenge the grounds of dismissal and allows employees and/or unions to gain assistance for attaining fairness and consultation, with potential assistance from the Labour Court.

The Labour Court has the power to reinstate and/or compensate retrenched employees if ArcelorMittal does not abide by the stipulations of Section 189 and 189A of the LRA.

Further, retrenchment proceedings could be delayed or prolonged by disputes that arise during intervention and conciliation processes, if employees – or ArcelorMittal – request the Commission for Conciliation, Mediation and Arbitration to appoint a facilitator to mediate the retrenchment debates or discussions.

Snyman says that challenging dismissals in court – such as in the case of the ArcelorMittal layoffs – could come with benefits of recompensation for workers, making it a successful process, if the company cannot remain operational.

He believes that the closure of the ArcelorMittal long-steel plants, should it occur, in addition to impacting on the livelihoods of workers, will also have a negative impact on businesses that rely on steel to manufacture products, which, in turn, will lead to “devastating effects” for the South African economy.

ArcelorMittal requires financial support – up to about R1-billion in funding – to survive and ensure a competitive steel sector in South Africa, with little reliance on imported steel.

Government intervention, support of the local steel sector and funding from public- private partnerships could help preserve jobs, sustain industrial capacity and prevent overreliance on imported steel – with the purpose of serving national interests, protecting workers, and ensuring economic stability.

Should the potential solutions to avoid the closure of the long-steel plants prove to be impractical or unfeasible, then solutions to avoid the mass retrenchment of workers, including phased retrenchments, reskilling programmes and wage negotiation strategies, should be implemented.

“The impending closure of ArcelorMittal’s Vereeniging and Newcastle steel plants raises complex legal, economic and social questions that demand a balanced approach from government, business and labour unions. While historical factors may influence public opinion on the closure, the reality remains that thousands of jobs, local economies, and South Africa’s industrial future are at stake,” Snyman concludes.