Banele Ginindza
ARCELORMITTAL SA lost about R1.5 million an hour in production when Eskom asked it to cut down on consumption, chief executive Paul O’Flaherty said on Friday.
As a major manufacturer, the company is among key power users that have had to accommodate Eskom’s pleas for reduced consumption to mitigate its power generation shortfall.
This “is a serious issue for us, it’s a serious issue for the country”, O’Flaherty said, while presenting the company’s results.
ArcelorMittal SA reported a fourth consecutive annual loss on Friday. The company posted a headline loss of 57c per share for the year to December, compared with a loss of 56c a year earlier. Headline earnings are the main measure of profitability in South Africa.
O’Flaherty lamented the continued delay of government’s R827 billion infrastructure spend announced in 2013, saying that there was only a minor pick up in the construction industry.
ArcelorMittal, which produces and sells flat steel for the manufacturing industry and rolled steel to the construction sector, decried the government’s lack of import restrictions on primary steel products, which gave China free reign over the local market.
O’Flaherty said China remained the wild card in the steel industry, “with excess capacity, of about 800 millions tons of steel per year and with the economy slowing down had to export as the only means of keeping the steel mills alive”.
“South Africa remains one of the few countries with no import protection on primary steel products… So if China wants to cover some form of cost they can dump it (steel) here at whatever price and that remains a serious challenge for us,” he said.
O’Flaherty also said the company had an issue with the performance of transport parastatal Transnet, which moved 12 million tons of raw materials around ArcelorMittal’s production plants in the country. “The internal infrastructure of Transnet has not been as focused as on the export lines. We continue to work in a collaborative manner with them,” he said.
He said the strikes in the platinum sector and the other in the steel industry orchestrated by the Steel and Engineering Federation of South Africa (Seifsa) resulted in a drop of 500 000 tons of steel consumption in the country over the year, which he added was significant.
Profit at the company’s mining unit fell 60 percent from a year earlier. Shares rose 1.68 percent on Friday to close at R25.99.