The world’s largest steel maker ArcelorMittal’s South Africa unit (ASMA) which supplies over 61% of the steel used in South Africa and exports to the rest to sub-Saharan Africa and elsewhere has announced that it will retrench nearly 1,000 workers and shut down its Saldanha plant due to severe financial losses, amid a global downturn in the steel industry.
The company has issued a statement stating that as part of a strategic review of its operations, the steel manufacturer found that its Saldanha operations had lost their competitive cost advantage to compete in the export market, mainly due to raw material and regulated prices.
The company’s management added that Saldanha’s losses were forecast to continue for the foreseeable future. The plant’s production facilities will be shut down, which will leave it only on “care and maintenance” by the first quarter of 2020.
Arcelor Mittal’s South African operations was first acquired from former state-owned steel manufacturer Iscor almost two decades ago but the company has been under pressure for the past few years amid a global downturn in the steel industry whereas the sales orders will be fulfilled from the group’s Vanderbijlpark Works.
As per the industry reports, a number of steps have been taken over past few months to avert the retrenchments at Saldanha. These included reduced energy and logistics costs for the company and at Saldanha, in particular, as well as further concessional pricing for AMSA from Kumba, which supplies ore to AMSA.
For Q3 2019 (Jul-Sep), the company’s liquid steel production at ASMA dipped by 236 000 tonnes y-o-y basis, or 18%, as a result of lower production at the company’s Vanderbijlpark Works which was largely a result of a planned production curtailment to adjust volumes to lower demand. Accordingly, capacity utilisation for Q3 2019 decreased to 65% compared to 85% in the comparable period. The company’s sales were down almost 17% in Q3 y-o-y as a result of weak local demand.
ArcelorMittal has reported a net loss of USD 539 million for the July-September quarter of 2019 hit by lower steel shipments and prices, and high material costs. Sales of the company declined to USD 16,634 million in the July-September quarter from USD 18,522 million in the year-ago period.
Leave a Reply