Steel producer ArcelorMittal South Africa (AMSA) insists that it is fundamentally stronger than was the case 18 months ago and that “profitability is within reach”, after reporting a headline loss of R1.49-billion during the first half of 2026.

The JSE-listed company had, over the past 18 months, placed its longs business into care and maintenance, leading to the closure of the Newcastle Works in KwaZulu-Natal, which contributed to some of the nonrecurring costs during the period.

It is also trading under a cautionary in relation to a possible transaction with the Industrial Development Corporation, on which no update was provided in the interim results.

CEO Kobus Verster said the loss was heavily influenced by R571-million of nonrecurring charges, including R38-million in severance and credit loss charges, R222-million of charges to support liquidity, R74-million to settle a legacy municipal legal dispute, and R237-million relating to the recovery of the blast furnace chilled hearth conditions in January 2026.

CFO Gavin Griffiths said that, without those charges, the group’s normalised earnings before interest, taxes, depreciation and amortisation (Ebitda) would have reflected a profit of R160-million.

Instead, it reported an Ebitda loss of R409-million, a deterioration against the R110-million loss in the same period of 2025.

“The business is moving closer to profitability, though it is not there just yet,” Griffiths added.

However, market conditions during the period from January to the end of June were also described by Verster as “exceptionally difficult”, characterised by weak domestic demand, elevated imports and global steel overcapacity.

AMSA’s flat steel capacity utilisation decreased from 69% to 66%, with Verster reporting that its Vanderbijlpark assets operated at the lowest levels technically possible in response to weak market conditions.

Crude steel production of 837 000 t was 5% lower when the output from Newcastle was excluded from the corresponding period, and 35% lower overall, while sales volumes of 758 000 t decreased by 2%, excluding Newcastle’s prior-period contribution.

Overall, AMSA estimated that South Africa’s apparent flat-steel consumption was 2% higher at 1.3-million tonnes, but steel imports remained elevated at 47% of that consumption, or 629 000 t, including 396 000 t that Verster said could be manufactured locally.

Market conditions were expected to remain challenging in the second half, but Verster said a combination of infrastructure investment and trade protection were expected to provide stronger demand support into 2027.

“Cost competitiveness remains a key focus, with initiatives targeting lower energy and logistics costs, fixed costs, footprint optimisation, AI-enabled productivity and automation,” he said, while indicating that he was optimistic of reaching a deal with Eskom on a negotiated pricing agreement.

The group was also assessing lower-cost road-to-rail options for coke imports from Zimbabwe and would assess prospects of reducing logistics costs further through contracting with a private train operating company.

Nevertheless, rand strength against the dollar represented a material risk to the second half outlook.