ArcelorMit­tal eyes Africa

Business Day - - FRONT PAGE - Siseko Njobeni In­dus­trial Writer njobe­nis@busi­nesslive.co.za

With steel de­mand in SA al­most at a 10-year low, ArcelorMit­tal is look­ing for ex­port op­por­tu­ni­ties in the rest of Africa, says CEO Kobus Ver­ster.

With steel de­mand in SA al­most at a 10-year low, ArcelorMit­tal is look­ing for ex­port op­por­tu­ni­ties in the rest of Africa, says CEO Kobus Ver­ster.

The do­mes­tic steel de­mand looks set to be lethar­gic for longer, with eco­nomic growth be­ing slow. The IMF this week low­ered its eco­nomic fore­cast for 2018 to 0.8%, from 1.5%. It also low­ered the 2019 fore­cast from 1.7% to 1.4%.

“Most steel firms re­quire a rea­son­ably strong lo­cal de­mand to be prof­itable. We are at the bot­tom of the cy­cle at this point in time and steel de­mand is se­verely im­pacted, with steel con­sump­tion in SA al­most at a 10-year low,” Ver­ster said.

The com­pany wants a big­ger mar­ket share in Africa as there is no ev­i­dence of growth in do­mes­tic de­mand, he said.

The foray into new mar­kets is among steps the com­pany is tak­ing to im­prove fi­nan­cial and op­er­a­tional per­for­mance, in­clud­ing restart­ing the Vaal Melt­shop plant in Vereenig­ing.

Ver­ster said the com­pany has pri­ori­tised re­duc­ing its cost base. “I think it is naïve to think that you can come out of a pe­riod of seven or eight years of losses and sud­denly start mak­ing prof­its.”

The com­pany’s “struc­tured” cost re­duc­tion in­cludes low­er­ing costs by $50/ton, which would im­prove sus­tain­abil­ity. In ad­di­tion, ArcelorMit­tal wants to raise out­put, hence the de­ci­sion to restart Vaal Melt­shop.

The low steel de­mand is in con­trast to the im­prove­ment in global de­mand in the past two years. “China has be­come much more re­spon­si­ble in its sup­ply. In­ter­na­tion­ally, we are around 80% of global steel ca­pac­ity util­i­sa­tion. That has re­sulted in bet­ter prices. In the past two years, steel com­pa­nies in Europe, US, Canada, China and South Amer­ica are mak­ing good money,” Ver­ster said.

Com­ment­ing on US tar­iffs on im­ported steel and alu­minium, he said the com­pany’s ex­po­sure to the US mar­ket is min­i­mal.

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