JOHANNESBURG – ArcelorMittal South Africa (Amsa) is to reopen its Vereeniging melt shop as part of its plan of increasing volumes.
Newly appointed chief executive Kobus Verster told journalists in Vanderbijlpark yesterday that the restarting of the furnace would add 150 000 tons of production annually and also boost Newcastle, which was struggling with rising costs. He said 100 jobs would be created at the smelter.
"We are busy interviewing people. The plan is to be operational in January,” said Verster. “We have a massive employment problem in South Africa. The problem starts when you look for the skills.”
Amsa announced plans to review its footprint in Vereeniging in 2015, when the domestic market buckled under lower prices that came as a result of the global slowdown in steel demand. Increased imports of cheaper Chinese steel and the bleak outlook of the construction industry, the largest steel consuming sector, also contributed to the woes.
Verster said the company planned to increase production at its Vanderbijlpark, Saldanha and Newcastle operations by between 500 000 and 700 000 tons a year by "de-bottlenecking" the current asset base.
“Once you have reduced your costs to acceptable levels you can increase volumes,” Verster said, adding that domestic demand was key to future growth in steel production. He said a growth rate of 1.8 to 2percent in the domestic economy would help keep the demand constant, but the company was also hoping to take advantage of the growth on the continent.
He said Amsa planned to cut costs by $50 (R739) a ton and to beef up its marketing in the rest of the continent.
Amsa has benefited from a 17percent jump in international steel prices and lower costs, which have helped it to post its first interim profit in six years.
In August the company said its headline earnings per share for the six months to end June rose to 5cents from a loss of 148c a share a year ago.
Amsa is also selling its 50 percent indirect stake in Macsteel International for $220 million as part of plans to turn the company around.
Verster joined the company in February after leaving JSE-listed construction company Aveng. He replaced Wim de Klerk, who stepped down at the end of January.
Yesterday, Verster said the government’s introduction of import tariffs and safeguards on certain steel products had helped ease pressure from the cheap imports. “Everybody is protecting their steel industry, especially in terms of promoting growth,” Verster said. “You have seen it in Europe.”