More pain for ArcelorMittal as steel manufacturer plans another round of job cuts in 2020

Steel manufacturer ArcelorMittal is facing tough times as they plan another round of job cuts in 2020. The company's CEO, Kobus Verster, recently spoke to CNBC Africa about the challenging year the company had in 2019, which he described as the most difficult since the financial crisis of 2008/9. ArcelorMittal swung into a headline loss of R3.3 billion from a profit of R986 million in the previous reporting period. This financial downturn has led to significant restructuring within the company, resulting in over a thousand job cuts in the past year. The closure of the Saldana Bay plant alone impacted around 450 employees as well as an equal number of subcontractors. Despite these challenges, Verster mentioned that the company is continuously looking to streamline its operations and reduce costs further to achieve long-term sustainability. As part of the restructuring efforts, ArcelorMittal has announced the closure of some long steel plants and the upstream operations in Newcastle. However, Verster clarified that they do not anticipate any further closures in the foreseeable future. The focus will now be on optimizing production for the domestic market in Africa to compensate for the decline in steel volumes and adjust the overall cost base accordingly. Verster highlighted that the company aims to substantially increase production at their Fenerbahre Park facility in the coming year, planning to produce an additional 400,000 tonnes compared to the previous year. This increase in production is essential to fill the gap left by the closure of the Saldana Steel plant. Despite the challenges, ArcelorMittal has received substantial support from its major shareholder and remains committed to achieving long-term success. When asked about the potential impact of the slowdown in the Chinese economy and the recent coronavirus outbreak on the company, Verster acknowledged the uncertainties but also highlighted potential opportunities. While short-term disruptions are expected, such as supply chain disruptions from China, there may also be opportunities for the company. However, the risk of a global economic slowdown due to the Chinese situation remains a concern, as the steel industry is heavily dependent on global growth. Verster also addressed the issue of load-shedding by the national power utility, Eskom, noting that it presents a challenge for ArcelorMittal's operations. He expressed hope that the new leadership at Eskom will address the issue swiftly to minimize its impact on businesses like ArcelorMittal. In conclusion, ArcelorMittal is navigating through a turbulent period as it implements further job cuts and restructuring measures to combat financial losses. The company remains focused on driving efficiency improvements and cost savings to ensure long-term sustainability amidst challenging market conditions. With the support from shareholders and a strategic path in place, ArcelorMittal aims to weather the storm and emerge stronger in the future.