[JOHANNESBURG] ArcelorMittal South Africa has issued force majeure notices to customers and suppliers "where appropriate" as a nationwide three-week lockdown impacts Africa's biggest steel producer.

Triggering a force majeure clause in contracts allows certain terms of an otherwise legally binding agreement to be ignored because of unavoidable circumstances.

"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 company said in a statement on Friday.

ArcelorMittal South Africa also said on Friday it has cut salaries for all employees, effective this month, for a "likely" period of three months.

All staff are working from home except essential staff needed for care and maintenance of the plants, the ArcelorMittal subsidiary, which runs the Vanderbijlpark steel works and Saldanha steel works, added.

Anticipating an impact from the novel coronavirus on the South African economy, the firm also said it would cut spending on noncritical goods and services.

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ArcelorMittal said "early signs" of weaker local demand were apparent even before the first case of Covid-19 was reported in South Africa, as the pandemic hobbles the global economy.

South Africa has been under a government-mandated lockdown to battle the spread of the new coronavirus for a week, with people's movements severely curtailed and many mining and processing operations halted.

REUTERS