Johannesburg - Willem de Klerk has a massive job ahead as he becomes the new boss of Africa’s biggest steel producer, ArcelorMittal South Africa (Amsa).
Yesterday Amsa announced that De Klerk will become the chief executive from September 1.
Read: ArcelorMittal SA's loss balloons
Amsa is in survival mode, having concluded a R4.5 billion rights issue in January and failing to deliver profits and dividends to shareholders in the past four years as losses widened due to slowing demand and as significant imports from China weighed heavily on the steel industry.
Amsa last year posted impairments of R4.3bn, including Saldanha Works’ assets that were impaired by R3.574bn because of the outlook for the export markets and coupled with high electricity prices among others.
Amsa’s self-imposed problems included a R1.5bn Competition Commission fine last year, the biggest in the commission’s history.
The extent of the troubled steel industry was evident when Amsa’s biggest competitor, Evraz Highveld Steel, filed for business rescue last year.
De Klerk will step into the shoes of Paul O’Flaherty, who stepped down at the end of last month. Amsa’s chief financial officer, Dean Subramanian, will be the acting chief executive of Amsa until De Klerk officially assumes his duties, according to a statement released by the company yesterday.
De Klerk is currently the financial director at Exxaro Resources, a position he has held since 2008. His appointment comes as a surprise as he gave no indication that he was planning on leaving Exxaro when he delivered the company’s annual results last week, and gave a tribute to long-serving chief executive Sipho Nkosi, who is stepping down at the end of this month.
Stringent process
Amsa chairman Mpho Makwana said that De Klerk was selected following a stringent process, which looked at criteria including experience, the ability to strategically transform the business in a challenging operating environment, while giving due consideration to the country’s transformation agenda.
“This includes, among other aspects, experience with communicating with a diverse set of stakeholders and detailed financial and operational knowledge,” Makwana said.
“We are confident that his vast business experience and understanding of the steel industry will enable him to lead the strategic transformation of the company,” Makwana added.
Stephen Meintjes, an analyst at Momentum SP Reid Securities, said Amsa had made a good choice in appointing De Klerk. “He (De Klerk) is good at negotiating with the public sector, and has had operational experience. I think this a good move for Amsa.”
Meintjes expected De Klerk to implement O’Flaherty’s strategy, which included settling the company’s legacy and ensuring that the government implemented all import tariffs to protect the steel industry against cheap Chinese imports.
“He needs to make sure the government puts in place duties which have been approved in principle, and to execute O’Flaherty’s strategy. Right now that strategy needs execution.”
Trade union Solidarity’s general secretary Gideon du Plessis said the union was positive about De Klerk’s appointment as he had experience, but was worried about the empowerment deal.
Amsa’s share price was down 2.94 percent to close at R9.90 on the JSE yesterday as resources retreated, following a rally earlier in the week.
BUSINESS REPORT