Amsa’s De Klerk jumps ship after barely 2 years
Company faces structural problems
ARCELORMITTAL SA (Amsa) chief executive Wim de Klerk is jumping ship barely two years after being thrust into the fire and tasked to turn around the ailing steel producer.
De Klerk’s resignation, however, was not unexpected, analysts said yesterday.
Amsa faces structural problems that saw De Klerk juggle the stronger rand, the subdued economic outlook, the low consumer confidence, cheap Chinese imports and higher electricity costs.
“It is not a surprise to see De Klerk is leaving. He has had a tough job.
“The strong rand coupled with the weak economic environment has created pressure for Amsa,” said one analyst.
The company announced that De Klerk would step down as chief executive and executive director with effect from January 31, 2018, and it would begin searching for his successor.
However, the analyst said that appointing a new chief executive would not necessarily resolve ArcelorMittal’s problems.
“I don’t think that appointing a new chief executive is going to help the company.
“Amsa’s problems are bigger than what a chief executive can fix,” said the analyst.
De Klerk, previously an Exxaro Resources financial director, was appointed to the Amsa position in September last year.
At the time of his appointment, he said ArcelorMittal was pivotal to the success of the South African economy and that he planned to work tirelessly with the government, labour and all other stakeholders to ensure the company remained relevant in future.
Amsa chairperson Mpho Makwana said the company made important progress under De Klerk, which also saw the implementation of safeguards on some products to support the sustainability of the domestic industry.
Makwana said Amsa also received import protection from the government through the introduction of duties on certain products including hotrolled steel.
The imports were granted in a bid to shield the steel industry from cheap steel imports from China. However, even with the safeguards, problems at Amsa continued.
“Challenges remain and we will commence with a search to appoint a new chief executive who can continue to implement our strategy and structurally improve the performance of the business,” said Makwana.
Amsa, Africa’s top steel producer, posted a headline loss of R1.161 billion in the first half of this year and has been vulnerable to the strengthening of the rand.
The higher iron ore and coal prices resulted in a staggering R983 million in losses from operations in the first half of the year.
The sluggish economic growth and low demand for steel had made matters worse for Amsa.
In July, De Klerk said the declining business confidence and the high unemployment rate had contributed to a weakened economy in South Africa.
“This has resulted in minimal local investment and infrastructural spend, particularly in the construction and manufacturing sectors, and it has seriously constrained the local steel market,” said De Klerk.
Apparent steel consumption feel 3.8 percent as a result of subdued economic growth in the first half of the year, De Klerk said. He added that despite the duties South Africa and key African markets continue to import large quantities of steel, especially from China.