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arcelormittal SA


Dear Valued Customers,

Please click on the following link for the latest price increase notice:

Price Increase Notice

Kind Regards,

Ropa Mhlanga

Operations Director – Southern African Region

Price Increase Notice 1st June 2017

Dear Valued Customers,

Please click on the following link for the latest price increase notice :

Price Increase Notice -June 2017

Kind regards,

Andrew Ioannou

Export Sales Manager

Predatory behaviour seems hotwired into ArcelorMittal’s DNA – Patel

Cape Town – Predatory behaviour seems to be hotwired into the DNA of steel conglomerate ArcelorMittal, Minister of Economic Development Ebrahim Patel said on Thursday.

Patel was speaking at the Competition Commission’s annual competition law, economics and policy conference focusing on competition policy and economic growth in Cape Town.

On August 20, ArcelorMittal agreed to pay a R1.5bn fine for price-fixing and collusion in the steel industry, as well as invest R4.6bn in new capital spending to upgrade plants and improve competitiveness.

Patel said the Competition Commission’s case against ArcelorMittal illustrates the complexities for the competition authorities and government.

“ArcelorMittal is a large, multinational corporation whose behaviour locally suggests – I dare say – that predation is hotwired into its DNA,” he said.

“Complaints to the commission against ArcelorMittal stretch back to 2003,” he said.

Deep legal pockets

The fact that it took the commission 13 years to investigate and settle the dispute with the steel manufacturer should be a lesson for the commission, according to Patel.

“The conclusion of the abuse of dominance case … was made more difficult in the view of the commission by the deep pockets of the litigant, the lack of clarity on the test for excessive pricing and the evidential burden that the commission would need to meet,” he explained.

“Yet this predator recently found itself in a rather unusual position, where it was facing injury from forces beyond its control,” he said. “China’s sharp pivot in its economic strategy contributed to a large and growing glut of steel in global markets.

“The company realised it needed the support of government to weather the storms,” he explained. “Government recognised the need to carefully manage the competing claims between the company and its downstream producers to enable South Africa to have a primary steel industry standing at the end of the great shake-up in markets that will conclude the current period of overproduction.”

Largest penalty yet issued

“The settlement between the commission and ArcelorMittal required the company to pay the largest penalty yet issued against one company – some R1.5bn – (and) to invest in additional R4.6bn in moderning (sic) its steel works so it competes on price and performance rather than on collusion and abuse of dominance,” he said.

“A cap was set on its pricing policies based on a 10% ebit (earnings before interest and taxes) margin, subject to some variation in defined circumstances,” he said.

“It’s quite a significant agreement dealing with pricing as a means to addressing rent-seeking behaviour and will no doubt be an important learning experience for the competition authorities.”

Patel said that while the commission was investigating ArcelorMittal, the industry was also in deep crisis. As such, he said government brought four instruments in the policy tool kit to address this.

The Competition Commission’s work was backed up by trade remedies through adjustments in import tariffs, public procurement provisions to buy steel locally and investment commitments by the Industrial Development Corporation to strengthen industries in the steel sector.

ArcelorMittal: deal provides closure

Responding to the speech, ArcelorMittal South Africa said it welcomed the agreement with the Competition Commission as it provides closure on the company’s negative association with former legacy issues.

“This association was deeply damaging to our business, to our reputation and to our relationships,” ArcelorMittal SA told Fin24 in an emailed statement on Thursday. “The settlement is part of a holistic approach to address our challenges and mend relationships with all our stakeholders.”

“The cases which were before the commission relate to activities that occurred more than eight years ago and we can confidently say that these anti-competitive practices ceased many years ago, thanks to the extensive work that has been done in the company to ensure that this behaviour never again finds place in our organisation.

“This includes strengthening internal controls and governance processes and training employees, contractors and other stakeholders with whom we do business on the company’s code of conduct.

“We are a company with strong values and sound governance at the very foundation of how we operate,” it said. “The CEO, Wim de Klerk, his management team and ArcelorMittal South Africa employees – who are shareholders in the business – are aligned on the business imperatives to return the company to profitability, and a fundamental driver of this strategy is to ensure that we maintain our licence to operate and remain a supplier of choice, supportive of the downstream industry.”

ArcelorMittal said the company will honour its agreement, which is pending Competition Tribunal approval.

Committed to being a good corporate citizen

ArcelorMittal said it was gratifying to hear that the government has acknowledged the centrality of a local primary steel industry in a country’s economy.

“Being a leading steel producer in the country brings with it a certain responsibility,” the company said. “We are firmly committed to being a good corporate citizen and making a valuable contribution to the socio-economic development of the country and the communities in we operate.

“Our intention to invest capital, and uphold the pricing principles which have been agreed with government, reflects our commitment to the growth of the South African economy through creating a sustainable business and growing the downstream industry by supporting our customers.

“As the country’s largest steel company, we are committed to continue contributing to the country’s GDP, creating employment and making a difference in the socio-economic development of the country, especially in the areas that we operate.”

Source – Fin24



SA needs more local brands to boost steel sector

Arcelor Mittal explains terms of agreement with government to save steel sector.


Governments’ negotiations with Arcelor Mittal South Africa (Amsa) on how to rescue the steel industry stem from the common consensus that steel-making capability in South Africa is necessary to give the country a competitive edge in terms of manufacturing and driving economic growth. This was a theme at a an event about the company’s 2016 factor report on Wednesday, where Amsa chairman Mpho Makwana said that more products needed to be made in South Africa for the industry to have a fighting chance.

As an example, he mentioned the country’s often heralded automotive sector, which actually does not do much for local steel.

“If you look at Arcelor Mittal in the US, for instance,” said Makwana, “more than 30% of our steel is carried in the average car that is made there. In South Africa, a mere 6% of our steel goes into the cars that are assembled here. That has far-reaching implications in terms of jobs. You want that number to be as close to the 30% benchmark as possible.”

Makwana said Amsa could strive to become South Africa’s version of South Korea’s primary steel producer POSCO, whose steel, or a certain quota thereof, is mandatorily used in Samsung and LG products, as well as Hyundai and KIA automobiles.

“We don’t have that benefit in South Africa because we are not yet a brand-centric country in terms of brands that are manufactured in South Africa and symbolically carry South African steel so that you can drive a car with pride knowing it is made locally with local steel.”

He said that, while Cadac gas canisters and locally manufactured Defy fridges use local steel, more needs to be done in terms of developing local brands.

Give and take

Makwana said that last year top CEOs of big and small steel players including former Amsa CEO Paul O’ Flaherty, together with the secretary generals of the two major unions went and met government together and said, “We need you to save our sector. It is bleeding from foreign attack.”

But that rescue plan will involve a give-and-take between government and Amsa, where the former will assist in protecting the sector from cheap imports and legislating that certain products must contain local steel content, while Amsa has had to make concessions on various legacy issues, including the R1.5 billion fine, while also putting a cap on future earnings and changing it’s pricing regime for local consumers.

Amsa general counsel and general manager of regulatory affairs Mohamed Adam outlined the terms of the renewed partnership with government.

“The principle is that we take some pain and we share some pain in the bad times, but we then give back in the good times. Conceptually, that is the essence of the agreement that we have reached with government,” said Adam.

Until recently, steel was excluded from minimum content thresholds for certain products in South Africa as part of the country’s transformation and developmental agenda, but it is now included in content ‘designations’ for certain products, like conveyance piping and power pylons. Amsa would like these designations extended to steel used in public sector construction projects.

“Government has asked what’s in it for them,” said Adam. “Two things: Amsa said it accepts that, with all the assistance from government, it has to be as efficient as possible so that the price people pay for steel in the country is based on it being an efficient operator. The second is that, if we get out of the crisis and enter a boom steel market other counties around the world are making huge returns of 20% and above, Amsa must contribute even more to growing the economy.”

Amsa has thus agreed to a fair pricing model, which is a price calculated on a basket-price with an earnings cap, while as a part of its competition commission fine, has also committed to spending R4.64 billion in capital expenditure so as to improve its own efficiency. Government has also demanded that it move from an import-parity pricing model in steel producing countries.

Amsa chief financial officer Dean Subramanian said this essentially means Amsa would need to be as efficient a steel producer as Germany, which is regarded as one of the world’s most efficient.

Makwana also said the company was in the process of transforming its R29 billion value chain, so as to empower disadvantaged persons. The three-year plan, which was put into action last year, will see Amsa insisting that its top 200 suppliers of raw materials, capital goods, logistics, and services are transformed. Since enacting the plan, the value chain’s BBBBE rating has gone from being at the lower-ranks of a level seven rating to a level three by the end of the year.


Source – Mineweb



Arcelor delighted new pricing principles suit steel industry

ArcelorMittal SA’s new CEO, Wim de Klerk, says the company’s new pricing policy for sales of flat steel products, agreed with the government, does not have precedent elsewhere in the world.

“Not as far as we are aware. These pricing principles were developed in consultation with government in the best interest of the local steel industry,” he says.

This comes as SA’s largest steel maker has finally acquiesced to long-standing government demands for regulated pricing and, therefore, a cap on earnings, amid a crisis in both the global and domestic steel industries.

“This is the intended effect of the pricing principles,” De Klerk told Business Day. “Pricing based on an import-weighted basket and a cap on ArcelorMittal SA’s earnings will assist in ensuring that competitive pricing can be passed on to the downstream industry.”

ArcelorMittal SA has agreed to this as part of a holistic solution for the sustainability of the industry, and which will contribute to economic growth, says De Klerk. “We await final approval of the pricing principles from government.”

Despite the seeming warm sentiments, the about-turn by the company comes after agreeing to pay a R1.5bn fine for anticompetitive practices. Amid state pressure, ArcelorMittalSA has also undertaken to invest R4.6bn to increase efficiencies.

This new pricing policy has been welcomed by the downstream metals industry in SA, and by the official opposition DA.

“This is a progressive step in allowing for small business to compete in the sector and create jobs, where previously collusion and a cartel had compelled small steel businesses to shut doors and retrench workers,” the DA says.

ArcelorMittal SA has undertaken to limit for a period of five years its earnings before interest and tax margin to a cap of 10% for flat steel products sold in SA.

However, it is not all a one-way street for the government. De Klerk says “holistic discussions about what is needed in these challenging times to preserve the industry” include the state providing its support for the designation of primary steel produced in SA for state infrastructure development projects, and settlement of competition issues.

Of six matters pending before the Competition Commission, the company has admitted guilt in respect of two — in long steel, relating to allegations of price-fixing, allocating customers and sharing commercially sensitive information; and in scrap metal, relating to allegations of price fixing by the company as a consumer of scrap.

The company says it has made no admission of guilt regarding an “excessive pricing complaint” against flat steel products, and that the Competition Commission has also made no finding in this regard. To this end, the supposed peace deal it has made with government involves several other factors.

“The objective of the pricing principles is to ensure that once the steel industry recovers from its current challenges, the benefits of having a local primary steel manufacturer will result in benefits for the downstream industry and the economy generally,” De Klerk says.

“This means a price for steel into the future that allows ArcelorMittal SA to earn a reasonable margin from domestic sales, while being competitive and efficient — a fair price — while at the same time promoting benefits for the downstream industry.”

De Klerk wrote last week in this newspaper that there was “scepticism within some sections of the government” about whether ArcelorMittal SA should receive protection from imports of Chinese-made steel.

He said then that “to some extent, legacy issues had clouded our relations with the government in recent years”, and that the process of negotiations with the state had “certainly re-emphasised for the company how important it is to have good relations with our stakeholders — and in this case, the government is both a regulator and a consumer of our product in state infrastructure projects”.

But while the government has imposed standard tariffs on imported steel, amid a global steel crisis and glut of product, it still has not implemented much more stringent safeguard remedies on steel imports that ArcelorMittal SA had asked for.

The pricing deal also comes as SA’s largest steel maker is still negotiating a long-delayed black economic empowerment deal. News on this is imminent. This follows an attempt by Gupta-related interests some years ago to take a R9bn “empowerment” stake in the company through an entity called Imperial Crown Trading.

After long and bitter court sagas, the deal was ultimately dismissed by the Constitutional Court in 2013. Had it succeeded, it would be so far underwater now as to likely be irredeemable. ArcelorMittal SA’s total market capitalisation now is barely R9bn, and not so long ago, was half that.

The eventual capitulation on pricing by ArcelorMittal SA comes amid renewed uncertainty around the probity of Gupta-related companies and their dealings with the government.


Source – BDLive


Solidarity warns steel industry will crumble

JOHANNESBURG – Trade union Solidarity has warned it’s only a matter of time before the steel industry shuts down for good.

The union said this is a result of unfair trade practices.

The industry that makes one of the strongest building materials is holding on by a thread.

South Africa’s steel industry has been bleeding, suffering financial and production losses as market prices collapsed.

Union Solidarity said the damage could be permanent, if higher tariffs aren’t put in place to protect local producers.

“Production in the steel industry is under distress, local production levels have fallen by 11 percent and linked to that we see steel imports from the East have increased significantly, from 500,000 tons to 1.5 million tons we need policies to protect our industry,” said Solidarity deputy general secretary, Marius Croucam.

In 2015, the South African steel industry suffered about 11 000 job losses.

ArcelorMittal South Africa accounts for 70 percent of domestic steel production.

Its financials for last year showed losses had ballooned to R8,5-billion.

Another local producer was not so lucky.

Evraz Highveld Steel said it closed its doors because of cheap imports. More than 2000 jobs were lost.

Asian steel imports are harming local manufacturers.

The union said although SA has trade relations with China, it should negotiate to protect its own companies.

“We need safeguards, and implement them in a way that we do so sustainably. We need to push our industry into the future and make sure our kids can find jobs in the future,” said Croucam.


Source – ENCA


Steel industry body seeks relief from harmful tariffs

TARIFF protection against cheap Chinese steel imports was harmful for local downstream steel manufacturers and should be abolished, an industry body said.

The tariffs were imposed to protect primary steel producer ArcelorMittal SA (Amsa), which has now agreed to drop import parity pricing and adopt a new pricing model for flat steel products.

But the National Employers’ Association of SA (Neasa) — which represents downstream manufacturers — objects to both the tariffs and the new pricing model.

The association’s CE, Gerhard Papenfus, said Amsa should compete with Chinese steel and if the producer could not do so, it should suffer the consequences.

He said that it was not possible to use tariffs to protect downstream manufacturers because “the downstream industry is simply too diverse”.

Neasa’s position is that the only way to foster the downstream industry would be to allow it to import cheap steel.

This is not the view of the Department of Trade and Industry, which wants to preserve SA’s steel producing capacity.

The department has approved 10% hikes in tariffs on 10 primary steel products.

In addition Amsa has applied to the International Trade Administration Commission (Itac) for safeguard duties of an additional 30% on hot-rolled and cold-rolled steel.

Itac senior manager for trade remedies Carina Janse van Vuuren said on Monday Itac had prepared a preliminary report on the duty increase application and would hold public hearings on Tuesday on the matter.

Trade and Industry Minister Rob Davies said in Parliament last week that SA needed its own steel producing capacity to industrialise and to beneficiate the iron ore it produced. “The loss of SA’s primary steel production capacity will leave SA at the mercy of the global steel market in the long run.”

Davies also insisted that government had supported the downstream industry with rebates on the customs duty paid on the imported steel used in the manufacture of goods destined for export.

Rebates were also available on the customs duty on imported steel or steel products that were not, or not sufficiently, produced locally. This allowed downstream manufacturers to source intermediate material at world prices.

But Papenfus said that the rebates were not the answer as they were impractical and an “administrative nightmare”.

A 30% duty increase would cause businesses to shut down and would be a “huge crisis” for the industry, he said.


Source – BDLive


ArcelorMittal SA steel mills to close as industry crisis bites

ARCELORMITTAL SA on Monday became the latest casualty of plunging steel prices and slowing demand, saying it would mothball two operations and review the viability of its largest steel mill.

It had “no option but to commence consultations” with employees and others affected by the closure of the melt shop and forge at its Vereeniging specialised steel works, it said.

SA’s largest steel company also said it would review its unprofitable main Vanderbijlpark works and group corporate services by the end of October.

It said: “Despite our best efforts, and given our assessment that the outlook is not about to change in the foreseeable future”, it had opted for the restructuring.

On Friday the government announced a 10% tariff on steel imports, aiding two of ArcelorMittal’s products.

But the tariff would only be of assistance in the medium-to long-term and trading conditions had continued to worsen, the company said.

About 400 direct employees and contract service employees will be affected by the closures.

Molten steel is processed at the melt shop. Forge products, such as axles and spindles, are manufactured for the construction, rail and armament industries, it said.

The company said consultations would be in accordance with section 189 of the Labour Relations Act, and that all employees and trade unions at Vereeniging would soon receive formal notification.

Negotiations would be about mothballing some of the operations and placing others under care and maintenance.

It was envisaged that the operations from the Vereeniging mills could be merged with its Newcastle works.

The National Union of Metalworkers of SA (Numsa) said it supported the government’s call for a moratorium on retrenchments and would “defend jobs”.

Gideon du Plessis, general secretary of Solidarity, said yesterday the trade union had signed a “plan” to limit retrenchments in the mining sector. The mining industry was a major customer of the steel industry.

SA’s second-largest steel maker Evraz Highveld Steel & Vanadium, based in Emalahleni, is in business rescue. It is holding a creditors’ meeting today to ascertain whether it will be able to save parts of the company.

ArcelorMittal SA said it had been “engaging extensively” with the government on the imposition of protective tariffs and antidumping duties on growing Chinese steel imports.

It also wanted more domestically produced steel products to be used in state infrastructure projects.

Two weeks ago, labour and business jointly presented to the government 10 “core collective demands” to prevent a tsunami of job losses in SA’s steel sector.

Among the demands were the imposition of tariffs to stop cheap steel imports from China; the designation of steel for government infrastructure spend; the “urgent roll-out” of the state’s 18 strategic integrated infrastructure projects; and delaying the implementation of the proposed carbon tax on the sector.


Source – BD Live