By Lynnette Johns and Andisiwe Makinana
Staff Writers
Minister of Trade and Industry Rob Davies was meeting ArcelorMittal and Kumba today to try to ward off a threat to close Saldanha Steel with thousands of jobs at stake.
His spokesperson, Sidwell Moloantoa Medupe, confirmed that Davies had requested the meeting after Kumba's announcement on Friday that it would stop supplying iron ore to ArcelorMittal SA steel plants unless it agreed to new terms and conditions.
ArcelorMittal said it would have to shut Saldanha Steel with the immediate loss of 4 000 jobs.
Kumba, a unit of Anglo American, said on Friday that it would make the steelmaker pay for ore in advance from next month after ArcelorMittal rejected proposed new pricing systems.
ArcelorMittal said: "(We have) no alternative but to immediately initiate plans for the immediate closure of the Saldanha plant, for the curtailment of all exports, and for a material reduction in domestic market production."
ArcelorMittal said the Kumba proposals would severely harm its profitability and it could not agree to them on an interim basis or otherwise.
Saldanha produces 1.2-million tons of steel a year.
In February, Kumba, the world's 10th largest iron ore producer, terminated the long-term deal under which it sold ore to ArcelorMittal at a discount and said it would charge market rates from March.
The Department of Trade and Industry has offered to mediate between the two.
"The DTI will be assessing all options available to ensure that in the event of a failure of the parties to reach a responsible settlement, the economy does not suffer negative consequences," said Medupe.
The provincial government also said it was watching the matter closely.
Tammy Evans, the spokeswoman for Economic Development and Tourism MEC Alan Winde, said it would assist where it could.
"We hope that the two parties can resolve this commercial dispute swiftly," she said.
Meanwhile, the provincial cabinet has approved the drawing up of a feasibility study for an industrial development zone (IDZ) in Saldanha Bay.
The provincial government believes that with its deep-water port, iron ore terminal and mega-smelters, Saldanha Bay is an area of major international significance in terms of industrial potential.
Winde said that between 1999 and 2008, Wesgro (the investment and trade promotion agency for the Western Cape) had been approached by several proponents of large-scale projects.
These included aluminium smelters, titanium processing plants, large-scale chemical plants and steel processing.
"But the lack of co-ordination and planning by the municipality and provincial government has mitigated against any of these opportunities being able to be developed," said Winde.
A pre-feasibility study towards the end of 2008 covered IDZ profiling and development zone location, Saldanha's economic profile, the local market profile, an industrial market analysis and a physical environment assessment.
A draft of the study was completed in September, and the report and the task team agreed on five potential clusters:
- Oil and gas servicing;
- Minerals processing;
- Renewable energy production and manufacture;
- Steel processing; and
- Ship repair.
Winde said key issues included the need for an overall environmental management framework to determine the critical limits to development, the requirements of additional bulk water and the need to upgrade power distribution lines.
The report identified 3 000 hectares that could form the IDZ.
The feasibility study is expected to be completed by next March.