Lakshmi Mittal's SA Steel Interests Revived After Threat Of Closure
2 August 2016
Steel magnate Lakshmi Mittal's South African interests are witnessing a revival barely a year after fears of closure and its impact on an entire town that depended on one of the plants of ArcelorMittal SA.
Among the reasons for the upturn are a 4.5 billion-rand rights issue earlier this year and tariff protection plans initiated by the South African government amid improved relations which had earlier soured because of the high prices charged by ArcelorMittal for local supply at international prices.
Mittal had acquired the former state-owned steelmaker Iscor a decade ago as he embarked on his global steel acquisition plans after first coming to the rescue of the ailing company to turn it around.
But by last year, a steep decline in profits as global steel prices fell led to threats of closure of some plants, especially the one at Vanderbijlpark, where the economy of the entire region is dependent on jobs at the plant.
The demise of ArcelorMittal's biggest South African rival, Evraz Steel and Vanadium, as well as the tariff protection, has led to a turnaround that will now save jobs at both its own plants and those at Evraz.
Evraz is currently under business rescue, with insiders saying that discussions are under way for ArcelorMittal to acquire the heavy steel milling operations of Evraz within the next year.
Industry analysts said concerns about possible refusal for the acquisition by the Competitions Board were eased by the fact that no other steel manufacturer in South Africa manufactures the products that Evraz used to make.
Tariff reviews by the government after reported talks at high level between Lakshmi Mittal and government leaders had led to the tariff protection in terms of which the country now imports only 8 per cent of the African continent's steel imports from China which was exporting steel at far lower prices than ArcelorMittal SA was providing locally.
ArcelorMittal SA chief financial officer Dean Subramanian said that there were ongoing discussions to ensure suitable pricing for sustainability of the local steel industry.
Source : economictimes.indiatimes.com