Mittal: Record losses but still no clear government policy

SEDIBENG.- ArcelorMittal SA last week announced record financial losses of R8.6 billion, even as President Jacob Zuma ignored the deepening crisis in South Africa’s steel industry in his State of the Nation Address (SONA). Zuma said nothing in his SONA address last Thursday evening about saving thousands of steel industry jobs, especially in the Vaal Triangle, the heartland of SA’s steel-manufacturing sector.
Government is seen as the key to AMSA’s financial sustainability but has been accused of sending mixed signals on the local steel industry by simultaneously implementing some import tariff protection but not exclu-ding the possibility of a erecting a new steel mill in the country.
The day after the SONA, AMSA mentioned further possible job losses through restructuring if government did not urgently designate local steel for infrastructure projects and accelerate requested import tariff protection, only some of which have been gazetted.
“Without the requisite tariffs and a commitment by government regarding the use of local steel for government infrastructure projects – which will be linked to a fair pricing model – the steel industry… will have to undertake significant and urgent structural change,” said outgoing AMSA CEO Paul O’Flaherty during AMSA’s annual results presentation on Friday last week.
He also said a “potential” BBB-EE (Broad-based Black Economic Empowerment partner ) – Likamva Resources – had been identified, but was subject to successful negotiations.
Improving its BBB-EE scorecard is seen as key to AMSA building good relations with government.
Likamva Resources over the weekend also reportedly said it intended getting involved with AMSA operationally and not just in Board membership.
In an apparent reference to possible regime-change within AMSA, Likamva Resources director Warren Wheatley, quoted in Business Day earlier this week, reportedly said: “We plan to become in every sense of the word, a partner of ArcelorMittal SA.” O’Flaherty also finally admitted that AMSA’s own actions or inaction – notably a failure to build good relations with government, unilateral price increases and anti-competitive behaviour over the past decade – had largely contributed to the shrinking steel giant’s present crisis.
He had also prior to the results announcement refused to comment directly on a Democratic Alliance (DA) claim in a media statement last week that government was dragging its feet on the steel sector because AMSA was planning a price increase.
O’Flaherty neither confirmed nor denied such a price increase when approached by Sedibeng Ster.