ARCELORMITTAL SOUTH AFRICA LIMITED - Conclusion of settlement agreement with the Competition Commission

Conclusion of settlement agreement with the Competition Commission

ArcelorMittal South Africa Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1989/002164/06)
Share Code: ACL
ISIN: ZAE000134961
(“ArcelorMittal South Africa or the Company”)


CONCLUSION OF SETTLEMENT AGREEMENT WITH THE COMPETITION
COMMISSION
Shareholders have been informed previously that the
Settlement Agreement between ArcelorMittal South Africa
and the Competition Commission (“Commission”) was being
finalised.

We are pleased to announce that all outstanding matters
have now been addressed and a settlement has been
reached, finalising all pending matters against the
Company. As communicated by the Commission, an
application has been filed with the Competition Tribunal
(Tribunal) for confirmation of this Settlement Agreement
as an order of the Tribunal. Shareholders should
therefore note that the Settlement Agreement is subject
to the approval of the Tribunal.

Subject to the final order being granted, this will bring
an end to these legal matters, which have been pending
against the Company for some time.

The Company has also pointed out that the matters related
to historical conduct by the Company, which has ceased.


The salient terms of the Settlement Agreement are
summarised below:

 Administrative Penalty

 The Company will pay an administrative penalty of
 R1.5bn, payable over 5 years, in instalments of no less
 than R300m per annum, commencing in 2017.

 In the light of the vulnerable state of the steel
 industry and the position of the Company, no interest
 will be levied on the administrative penalty for the
 first 18 (eighteen) months from the date on which the
 Settlement Agreement is made an order of the Tribunal
 and thereafter interest will be levied on the remaining
outstanding balance at the prevailing interest rate
prescribed by the Minister of Finance, currently 10.5%.

Admissions

Of the 6 matters pending before the Commission, the
Company has admitted guilt in respect of two matters -
being the Long steel matter, relating to allegations of
fixing   prices,   allocating   customers  and  sharing
commercially sensitive information; and the scrap metal
matter relating to allegations of price fixing by the
Company as a consumer of scrap.


Pricing Remedy for Flat Products

The Company has made no admission regarding the
excessive pricing complaint and the Commission has made
no finding in this regard. Notwithstanding, in the light
of the previous concerns regarding pricing and the
Company’s commitment to work with Government and all
stakeholders to contribute to growth of the South
African economy, the Company has agreed to a pricing
remedy for local flat steel products.

In terms thereof the Company shall for a period of five
years not be permitted to earn an EBIT (earnings before
interest and tax) margin percentage greater than 10%
relating to flat steel products sold in South Africa
over a 12 months period (measured over the Company’s
financial year).

However, the Company will be permitted to exceed the 10%
cap up to a maximum of 15% in certain defined
circumstances.

Investment

The Company has also committed to capital investment of
at least R4.6bn over the five year period subject to it
being affordable and feasible in the light of the
financial circumstances.


Monitoring

There are provisions for monitoring by the Commission
which will allow for ongoing engagement and the sharing
of information, as well as the opportunity to engage if
there is a significant change in the economic, financial
and market circumstances.
 The Company has been proactive and various interventions
 have already been implemented within the Company to
 ensure that there is more vigilance to guard against
 such conduct happening again. This includes an enhanced
 training and compliance programme. Ongoing communication
 will also be enhanced.

 There is a firm commitment by the leadership of the
 Company to ensure that the Company is committed to being
 a good corporate citizen that makes a valuable
 contribution to South Africa, and that it conducts its
 business in a transparent and responsible manner.

By order of the Board

22 August 2016
Vanderbijlpark Works


Sponsor to ArcelorMittal South Africa Limited
J.P. Morgan Equities South Africa Pty Ltd


For further information please contact:
Themba Sepotokele
Manager: Corporate Communications and Branding
Tel: (016) 889 2425

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