South African miner Assmang is reportedly contemplating closing its Beeshoek iron ore mine following its failure to secure a contract with its primary customer, ArcelorMittal South Africa, reported Reuters.

The potential shutdown of the mine could lead to the loss of 688 jobs, a situation that has prompted discussions with unions.

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Assmang, a joint venture between African Rainbow Minerals and Assore, communicated the potential closure in a notice to unions.

The company expressed that the decision was prompted by ArcelorMittal South Africa’s unexpected refusal to sign a three-year supply contract with the Beeshoek mine, despite previous indications of a possible agreement.

“Moving forward, Beeshoek proposes to discuss with the unions the potential closure of Beeshoek,” stated Assmang in the notice.

The mine, which relies heavily on ArcelorMittal South Africa as its sole significant customer, has found itself in a precarious position.

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“The customer is not willing and has declined concluding any long-term contract with Beeshoek mine,” Assmang added, noting that alternatives such as exports were explored but found to be unviable.

ArcelorMittal South Africa, on the other hand, has refrained from commenting on the situation.

A spokesperson for the company was quoted as saying: “Given the complexity of the matters under discussion and our cautionary announcements, we are limited in what can be discussed in the public domain at this stage.”

Trade union Solidarity, representing some of the workers at Beeshoek, has been informed about the initiation of the layoff process for the entire staff at the mine.

Solidarity’s mining sector organiser, Adele Rossouw, was quoted as saying: “Due to the fact that they do not export, and since their only client can no longer buy from them, the worst possible option is now being considered.”

The steelmaker’s 1bn reais ($56.75m) loss for the six months to 30 June, has been exacerbated by weak local demand, high electricity tariffs, and competition from Chinese imports and local scrap metal-recycling mini mills.

The company has also announced plans to shut down its loss-making long steel plants in Newcastle and Vereeniging, although these closures have been deferred for two years as discussions with the government and other stakeholders continue.

ArcelorMittal’s search for financial support to postpone the shutdown of its long steel business has been ongoing since March, following its announcement in February to cease operations by April after unsuccessful discussions with the government.

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