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Kallanish Kallanish

Knowledge matters Knowledge matters

August, 14th 2020

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DEC 02

South African government receives Saldanha interest, urges sale


South Africa’s Department of Trade, Industry and Competition (DTIC) has received expressions of interest by two parties to buy the Saldanha Steel works from ArcelorMittal.

ArcelorMittal South Africa (AMSA) said last month it plans to cease operations at Saldanha and put the unit on care and maintenance by end-March 2020 (see Kallanish passim). This is because the plant is suffering from severe financial losses that are forecast to continue for the foreseeable future, on account of losing its competitive cost advantage in the export market.

South African trade and industry minister Ebrahim Patel has since urged AMSA to continue working with National Government and other social partners to reverse this decision.

“We are encouraged by these early expressions of interest in Saldanha Steel,” he continues. “If AMSA is still intent on closing Saldanha Steel, a decision we do not agree with, then nonetheless we urge the company to engage actively and openly with potential buyers, and to offer them terms that would enable operations at the steel-mill and employment opportunities to the local community.”

DTIC, the Department of Public Enterprises, Eskom and Transnet have engaged with AMSA management on support which could be provided to reduce energy and logistics costs for the company at Saldanha, DTIC says.

“Government facilitated engagements with iron ore and coal producers as well as organised labour to come up with solutions to reduce costs in order to avert job losses,” the department explains. “The combined support package, offered by government ranged from concessions on iron ore pricing, electricity, water and rail tariffs, providing considerable cost savings. AMSA has asked for support, however, in excess of what was made available through the efforts of Government.”

The African Continental Free Trade Area (AfCFTA) is expected to open up additional demand for primary steel across Africa from July 2020, the department adds.

“We have embarked on the process to develop a Masterplan for the Steel and Metals value chain in South Africa which will include both demand- and supply-side measures, and bring greater competitiveness and dynamism to the entire steel and metals industry,” Patel observes. “A number of initiatives are in progress to foster greater demand for steel by both the public and private sector, and to improve the cost base across the industry.”