ArcelorMit­tal re­views Sal­danha op­er­a­tion as losses surge

CityPress - - Business - – De­wald van Rens­burg

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.

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