Over-regulation, high production costs put ArcelorMittal on the back foot | IOL Business Report

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ArcelorMittal South Africa (Amsa) has said it is fighting losing battles behind the scenes against over-regulation and high production costs. busrep

JOHANNESBURG – ArcelorMittal South Africa has said it is fighting losing battles behind the scenes against over-regulation and high production costs, including that of electricity, as the six months to June indicate a bruising period in which it made a R222 million loss from a R1.2 billion profit a year earlier.

“These unaffordable increases resulted in R168m in additional costs against the comparable period. “Winter tariffs add on average R110m to the monthly electricity cost of the company,” said Verster. Verster said the company had so far received negative feedback from Eskom, which had turned down its proposed tariff reduction, adding that Amsa planned to convince Eskom otherwise.

Amsa last month said it would embark on a restructuring exercise that would possibly result in 2 000 job losses, citing a difficult domestic economic environment. The group warned that South Africa’s steel consumption was at a 10-year low as it posted a headline loss of R638m compared to headline earnings of R54m for the same period last year on lower sales prices and volumes, higher electricity, rail and port tariffs, and sharp increases in iron ore.“In South Africa we need a 1.

Revenue decreased by 5 percent to R21.74bn primarily as a result of lower sales volumes of 9 percent, and on a positive note, the weak exchange added R1.2bn to income. In a bid to curb rising costs, Verster said the group would intensify engagements with key stakeholders to reduce the costs of electricity, rail and iron ore.

 

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