Johannesburg - ArcelorMittal’s South African unit and the country’s state-owned development-finance company are considering options that may lead to the reopening of Evraz Highveld Steel and Vanadium’s heavy-section steel mill after it was shuttered when the business was wound down.
ArcelorMittal South Africa, the Industrial Development Corporation and the business rescuers for Highveld are looking at supplying blooms and slabs to the idled producer for it to process into heavy structural steel, the continent’s largest steelmaker said in a statement Friday.
“If successful, this could result in the reopening of the heavy-section mill by the business rescue practitioner, making available the supply of heavy structural products into the South African market,” it said. AMSA, as the ArcelorMittal unit is known, and the IDC are considering the possibility of acquiring the mill after a year.
AMSA, which said its first-half loss widened from a year earlier, is struggling to restore profit after a surge in imports from China at prices as much as a quarter below local production costs. The company is calling on the government to buy local steel, and increase both tariffs and anti-dumping duties to make its business more viable.
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Highveld, which was South Africa’s second-biggest steel producer, was placed under the local equivalent of bankruptcy protection last year after a slump in demand and competition from imports let it with insufficient funds.
Sales increase
“If the agreement for the supply of blooms and slabs is implemented, this should have a positive impact on the revenue of ArcelorMittal South Africa due to increased volumes,” it said.
AMSA’s sales climbed 10 percent to 2.2 million metric tons in the six months ended June 30 from a year earlier after the government introduced a 10 percent import duty on a range of products, the market replenished stocks and Highveld closed, it said.
Its headline loss increased to R458 million ($32 million) from R109 million a year earlier, the company said.
While steel prices will improve in the second half, costs are also expected to increase, AMSA said. Shipments are expected to remain consistent with those reported for the first six months of the year.
BLOOMBERG