The National Union of Metalworkers of South Africa (Numsa) and ArcelorMittal South Africa (AMSA) have signed a three-year wage agreement, averting a costly strike.

AMSA workers will receive a 6.5% increase in the first year; 6.5% in the second year; and for year three, the adjustment will increase with inflation, although it will be capped at 6.5%. The medical aid subsidy and all allowances will increase at the same rate.

Employees will also receive a once-off cash signing bonus of R10 000.

The wage agreement spans from April this year to the end of March 2026, meaning workers will receive back pay for the past month.

AMSA – South Africa’s only primary steel producer, which has 10 270 employees and contractors – reported an R2.3 billion hit to its 2022 earnings as a result of load shedding, rail dysfunction, and labour strikes.

The latter had accounted for R770 million in losses for the company, before a one-year wage deal for a 6.5% increase was struck in May.

Talks between the company and union had deadlocked in early April, prompting Numsa to warn it would embark on the “mother of all strikes” if a deal could not be struck through the Bargaining Council’s dispute-resolution process.

“We welcome the signing of this agreement, particularly because at some point we were on the verge of a strike,” Numsa general secretary Irvin Jim said on Monday. “However, we managed to find one another, and this has been crucial in resolving this round of wage talks.”

The company contribution of medical aid will remain at 60% for the employer and 40% for employees for year one; for year two, the medical aid contribution will increase to 65%, and the workers’ contribution will reduce to 35%, subject to the medical subsidy cap. In the third year, it will increase to 70%, but the employer contribution will reduce to 30%, subject to a medical aid subsidy cap.

The paternity benefit for AMSA employees will increase from 10 to 12 days, and the funeral benefit will double from R10 000 to R20 000 in the first year of the agreement.