South African business ArcelorMittal is considering cutting more than 2,000 jobs as part of a large-scale restructuring, following reports of a sharp drop in profits.
The company of British billionaire Lakshmi N. Mittal reported excessively high costs for electricity, railroad and primary raw materials, and also complained about cheap imports, which create a "difficult internal environment" for the metal industry in South Africa.
The company expects its total profit for the six months of this year to decline by nearly $ 50 million, resulting in losses and a decline in stock returns of at least 59 cents.
ArcelorMittal S.A. Stock Quote fell 8 percent in early morning trading on Wednesday. The last time the company showed net income was in 2011.
The news comes amid an ongoing downturn in South Africa's economy, which saw its strongest quarterly drop in GDP in a decade, increasing pressure on President Cyril Ramaphos to revive the continent's most industrialized country.
As with other heavy industries in South Africa, local ArcelorMittal faced power outages earlier this year by the country's energy monopoly Eskom, which is also struggling with the financial crisis.
The US government's removal of steel and aluminum tariffs for Canada and Mexico has also hit South African steel producers, whose exports have become uncompetitive in the region.
This is not the first time Lakshmi Mittala's South African steel mill has come under financial pressure. Since 2015, the company has changed its CEO three times and has received financial support from the authorities. In 2018, the South African government set up a working group to 'bail out' the metals industry, but has not been successful.
