Johannesburg - Arcelormittal South Africa (Amsa) on Friday said it had pinned its survival hopes on the implementation of local content designation by the department of trade and industry (DTI).
The company said it had cut its headline losses for the year ended December. It said the implementation of the designation would help it as the domestic and export markets were extremely constrained in the period under review.
Amsa chief executive Wim de Klerk and the company saw minimal growth due to import substitution during the period. He said trading conditions were worsened by the imports of large quantities of steel from China. “1.2million tons of steel were imported into the country, which reflects the need for safeguard measures for primary steel manufacturers to address the surge in imports. Apparent steel consumption decreased by 3.4percent as a result of subdued economic growth.”Last month the National Treasury published an instruction note in line with the Preferential Procurement Regulations of 2011 to allow for designations to come into effect from the beginning of this month.
The note instructs accounting officers to specify 100 percent local content for fabricated structural steel products to be procured by state entities for use in public projects.
The company said its loss from operations decreased from R4.7 billion to R1bn, while its headline loss was reduced from R5.3bn to R2.5bn during the period.
Group revenue increased 5 percent to R32.7 million, and the company attributed the surge to the 8 percent increase recorded in average net realised steel prices, from R6727 to R7282 per ton.
Total volume of steel in sales in the period decreased by 44000 tons with its export sales declining by 26 percent. It said this was because of the over supply of steel in the global market.
The company said its black ownership increased to 25percent and employee ownership to 6.6 percent following a B-BBEE transaction it entered during in the period.
De Klerk said there was an urgent need to safeguard the industry from cheap imports to ensure the survival of the primary steel industry in the country.
Amsa shares rose marginally at 0.88 percent on Friday to close at R13.78.