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Nonkululeko Nyembezi-Heita, CEO of ArcelorMittal SA (Amsa), gave a frank and sombre assessment of the country’s steel market saying it was currently uncompetitive globally.

“There probably is no steel producer in South Africa that is globally competitive, not us, nor anyone else,” Nyembezi-Heita is quoted by City Press to have said.

“What is interesting, though, is that this is not only the case in South Africa. Steel producers are struggling across the globe,” she added.

City Press observed that Nyembezi-Heita’s comments, while not aimed directly at the South African government, come less than days after the trade and industry department unveiled the fifth version of South Africa’s Industrial Policy Action Plan (IPAP).

On April 8, Miningmx reported that the IPAP had set out wide-ranging interventions to secure steel at “developmental prices” and make it available to the downstream manufacturing industry.

These steps included securing iron ore at below internationally traded prices and restricting scrap exports.

In South Africa, Amsa itself saw its headline earnings plunge from R5.7bn in 2007 to a loss of R518m last year notwithstanding preferential prices iron ore supply from Kumba Iron Ore, said City Press.

Nyembezi-Heita said the global industry’s prospects were almost entirely dependent on whether China, which controls 47% of the market (up from 12% in 1992), decides to cut back on production.

She reflected on conditions that had made Amsa one of the world’s cheapest steel producers until 2007 have since completely changed.

“We had the cheapest electricity rates on planet Earth and relatively cheap labour. We didn’t have to worry over the exchange rate because our sources of competitive advantage came from an entirely different direction.

“Fast-forward five years later, probably nothing could be further from the truth,” City Press quoted Nyembezi-Heita to have said.

Source : Business Day Live