ArcelorMittal has ‘no intention’ of exiting SA

Africa’s largest steel maker, ArcelorMittal South Africa, on Monday said it “has no intention of exiting South Africa and has indicated no such course of action”.

This was despite a South African financial daily claiming that the company, the domestic arm of the global steel giant ArcelorMittal, could pull out of the county if it is not allowed to charge prices deemed excessive.

The report followed ArcelorMittal’s Competition Appeal Court hearings last week to reverse a ruling that the company charged excessive prices and to cancel a record fine of R691,8-million.

Representing close to 12% of ArcelorMittal South Africa’s R5,72-billion profit last year, the 2007 fine is the highest penalty ever imposed by South Africa’s competition authorities.

Local buyers have for years rallied against the import price parity mechanism ArcelorMittal uses to price its steel.


But the company has argued that its pricing model, which is based on a basket of prices from a range of international markets, is a fair model that gives South Africa the benefit of a competitive global steel market.

“In explaining various pricing mechanisms to the Competition Appeal Court last week, our senior counsel, Owen Rogers, referred to the absence of a large local steel producer in a theoretical exercise to illustrate the concept of import parity pricing,” explained ArcelorMittal manager of corporate communications and branding Sven Lunsche.

“The newspaper’s interpretation that these statements signal an intention to exit is completely erroneous,” Lunsche said.

He added that ArcelorMittal has in fact been rolling out an R11-billion capital-expenditure programme, which would increase production capacity by 30% by 2013.

This would enable the company to meet local demand without having to resort to importing steel, Lunsche said. — I-Net Bridge

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