Bleak future for Vereeniging as crisis hits steel industry

VEREENIGING, 25 August 2015 - As under pressure industries take a nosedive in the economy, Vereeniging is one city in the country with a bleak future. The city's steel sector - which is that local economy's backbone - is on the verge of collapse. Video: eNCA

VEREENIGING - Vereeniging is but one place in the country with a bleak future as under pressure industries take a nose dive in the economy.

The city's steel sector - which is that local economy's backbone - is on the verge of collapse as local industry battles to compete with cheap Chinese imports.

"The major players in the field has cut their order with the best part of 80%. The fact that that core has been reduced, has such a ripple effect going down the line," said Clypac Steel's Attie Schoeman.

Schoeman said the local industry can't cope with competition from cheap Chinese exports.

Vereeniging’s hundred-year-old steel plant, now owned by ArcelorMittal and just three kilometers away produces steel at R8000 a tonne.

While metal from China is delivered to their door for R7000 a tonne.

Official trade statistics put steel imports from China at almost 490 000 tonnes in the first five months of this year - more than double last year’s number. 

With ArcelorMittal considering mass retrenchments and possibly even closure of its plant, government has promised to impose a 10% tariff increase on all imports in the steel sector.

But it's unlikely to affect the jobs already lost in the supply chain industries, which rely on ArcelorMittal.

"They saying they aren’t going to shut down the steel industry. But I can already see it closing – everyone is sitting without jobs," said Dean Verrit, an unemployed steelworker.

And it’s not only steel workers set to suffer. The entire Vereeniging economy hinges on the 1200 jobs Arcelormittal provides and consumers are scrambling to make ends meet with short term loans and unsecured credit. 

* Watch the full report in the video gallery above


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