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ArcelorMittal South Africa makes progress despite future uncertainties

ArcelorMittal South Africa's annual report reveals progress despite future uncertainty.

ArcelorMittal South Africa makes progress despite future uncertainties

ArcelorMittal South Africa (AMSA) reported progress in its 2023 report, despite uncertainty over the future of its Newcastle and Vereeniging plants. The company highlighted the need for reliable, consistent quality products and the need to secure operating licenses.

Flat steel sales increased by 11% to 1.476 million tons in 2022, while long steel shipments increased by 13% to 936,000 tons. Growth was mainly driven by higher exports, but South African sales also increased by 1.4%. The company also made progress in replacing imported steel products, particularly in the truck and trailer segment, saving local jobs and investments.

AMSA reported improved capacity utilization and plant reliability, with Vanderbijlpark at 60% capacity utilization and Newcastle at 55% in 2023. The temporary repair of the N5 blast furnace in 2022 led to near-optimal iron production at Newcastle with exceptional performance costs of USD 390/tonne. However, Newcastle's billet mill experienced difficulties that reduced productivity. In the third quarter of 2023, Transnet Freight Rail's poor delivery performance caused the N5 blast furnace in Newcastle to idle for five weeks, resulting in a loss of 248,000 tons of steel production.

AMSA also reported a 6% increase in coke production in 2023, with 1.44 million tons produced, supported by 532,000 tons of imported coke. This increase was driven by ongoing restoration and asset maintenance upgrades that cost 312 million Rand ($16,771,903) in capital expenditure and 8 million Rand ($430,049) in non-capital restoration expenditure.

The bulk of capital expenditure in 2023 is dedicated to kiln restoration, including four kilns in Newcastle, costing 100 million Rand ($5,375,610). The company also made progress on its long-term coke production strategy, including the construction of two new batteries at Vanderbijlpark with a combined capacity of 750,000 tons per year.

Vanderbijlpark, a Dutch company, renewed its atmospheric emission license (AEL) this year, with renewals expected for Newcastle, Pretoria and Vereeniging in 2024. Despite ongoing projects for efficiency and sustainability, the future of the company remains uncertain. Bonang Mohale, CEO of ArcelorMittal South Africa, attributed the decline in Newcastle's prospects to the mismanagement of Transnet Freight Rail (TRF), which has had a devastating impact on job creation and investment.

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