ArcelorMittal reviews Saldanha operation as losses surge
Dominant steel maker ArcelorMittal SA (Amsa) this week announced that its Saldanha steelworks were being reviewed – raising the possibility of closure.
The firm has been reeling from a crash in steel prices and is waiting for government to process a range of new tariffs to fend off Chinese imports – as well as to decide on the “designation” of steel, forcing public projects to buy local.
A new trading update on Thursday revealed massive new impairments, including R3.57 billion related to Saldanha.
As part of the dramatic turnaround in Amsa’s relationship with government, it has made a R1.25 billion provision to settle its longoutstanding business with the competition authorities, while talks with government related to a new steel pricing system have apparently made “significant progress”.
This follows almost a decade of animosity over Amsa’s alleged abuse of its monopoly to charge import parity prices in South Africa. Operating losses last year amounted to R2.56 billion, the company said. Amsa’s share price recovered after the announcement, ultimately rising almost 26% over the course of Thursday and Friday. The company is, however, still sitting with a market capitalisation of R8.6 billion – less than a third of its value a year ago.