ArcelorMittal South Africa has taken several steps to support the 21-day lockdown that has been implemented and to ensure the safety and wellbeing of its employees, customers, suppliers and other stakeholders.
All ArcelorMittal South Africa offices and operations across the country have been closed during this period and ArcelorMittal South Africa employees will stay at home, except for essential operational staff who will be required for care and maintenance to avoid damage to plant and equipment, as is permitted in terms of the regulations.
For these employees, ArcelorMittal South Africa has taken steps in line with government and the World Health Organisation recommendations to ensure their safety and well-being.
Consequently, where appropriate, force majeure notices have been issued to customers and suppliers.
While the need for such action is clear and supported, it will result in further challenges over and above the effects of an already struggling economy and the economic impact of COVID-19 globally and locally.
The early signs of further weakening in local demand were apparent even before the first positive case of COVID-19 was reported in South Africa.
Shareholders had been informed of the critical steps taken during 2019 to ensure the sustainability of the Company.
This included the large-scale labour reorganisation concluded at the beginning of the year, the Strategic Asset Footprint Review, which resulted in the decision to place the Saldanha Works into care and maintenance and the review of the Newcastle Works, which is now primarily focused on servicing the domestic and Africa Overland markets.
The anticipated impact of COVID-19 on the economy has led ArcelorMittal South Africa to consider further measures to ensure its sustainability.
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Several temporary interventions have been implemented, including curtailment of expenditure on non-critical goods and services, short time, and salary reductions for all employees with effect from April 2020 for a likely period of three months.
The Company is also accessing measures introduced by government to assist companies and employees, including the revised UIF benefits. The reduction of sub-contractors, reconfiguration of the operating model, and the various corporate actions to strengthen the balance sheet (including non-core asset disposals) as announced in February 2020, will continue.
COVID-19 brings unprecedented challenges for everyone and we need to work together as a community to support each other through these challenges.
We are proud of the ongoing support and commitment of our employees
during this difficult time.
The unpredictable effects of the COVID-19 pandemic and national lockdown have created uncertainty regarding the extent and timing of the impact on production and sales volumes and have increased the risk of defaulting customers.
Depending on the extent to which these risks materialise, there could be a disruption in ArcelorMittal South Africa’s working capital cycle which may require further interventions.
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