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 billionrand 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 stateowned 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: ET