ACL - ArcelorMittal South Africa Limited - Kumba halts Iron Ore supply to

ACL - ArcelorMittal South Africa Limited - Kumba halts Iron Ore supply to       
Arcelormittal and further cautionary announcement                               
ArcelorMittal South Africa Limited                                              
(Incorporated in the Republic of South Africa)                                  
(Registration number: 1989/002164/06)                                           
Share code: ACL                                                                 
ISIN: ZAE000134961                                                              
("ArcelorMittal" or "the Company")                                              
KUMBA HALTS IRON ORE SUPPLY TO ARCELORMITTAL AND FURTHER CAUTIONARY ANNOUNCEMENT
ArcelorMittal and Sishen Iron Ore Company Limited (`SIOC`), a subsidiary of     
Kumba Iron Ore Limited, have failed to conclude an interim price arrangement for
the supply of iron ore.                                                         
As a consequence, SIOC has informed the Company that it will cease supplying    
iron ore to ArcelorMittal`s steel plants within two weeks unless ArcelorMittal  
agrees to the terms and conditions which SIOC requires to govern the supply of  
ore.                                                                            
The interim arrangement would have governed the terms of iron ore supply until  
the conclusion of an arbitration process that is currently underway and which is
aimed at resolving a dispute in terms of the agreement that the parties entered 
into in 2001.                                                                   
SIOC had demanded that ArcelorMittal pay to SIOC a price of US$50 per ton of    
iron ore for the Saldanha plant, and US$80 per ton of iron ore for              
ArcelorMittal`s inland facilities.  The prices offered would escalate by 10%    
every six months until 1 September 2011, following which ArcelorMittal would be 
expected to pay SIOC the prevailing market price.                               
While a price of US$50 per ton of lump iron ore for the Saldanha plant was      
agreed in principle, a suitable price agreement was not settled for             
ArcelorMittal`s inland facilities. US$50 per ton would have allowed             
ArcelorMittal to continue operating the Saldanha plant at around break-even     
levels, but the pricing demand from SIOC for inland facilities would make       
exports from these facilities largely unprofitable.                             
The SIOC offer of US$50 per ton and US$80 per ton of iron ore amounts to        
increases of 69% and 171%, respectively, over the cost plus 3% amounts to which 
Kumba is contractually entitled.  These increases would significantly boost the 
high operating margins of Kumba, while it will impact extremely negative on the 
profitability of ArcelorMittal.                                                 
In the prevailing circumstances, it is not possible for ArcelorMittal to agree  
to the prices being demanded by SIOC, whether on an interim basis or otherwise, 
which would threaten the viability of ArcelorMittal`s business.                 
ArcelorMittal firmly believes that the parties` negotiations were advancing     
positively, despite the continued public threats by Kumba to halt iron ore      
supply, if ArcelorMittal did not capitulate to SIOC`s terms and demands.        
During the period when the interim pricing negotiations were underway, steel    
prices have reduced by approximately US$100 per ton, while iron ore prices have 
decreased by about US$50 per ton.  ArcelorMittal has, in turn, reduced local    
steel prices in July 2010 by 15% placing significant pressures on already tight 
operating margins.                                                              
While iron ore supplies will continue from SIOC`s Thabazimbi mine, scrap and    
other suppliers, these will not be sufficient to provide the complete needs for 
ArcelorMittal to meet current sales orders and future steel demand.             
ArcelorMittal now has no alternative, but to immediately initiate plans:        
for the immediate closure of the Saldanha plant;                                
for the curtailment of all exports; and                                         
for a material reduction in domestic market production, resulting in market     
allocations.                                                                    
This will result in job losses and will seriously impact downstream industries. 
It is anticipated that approximately 3 000 to 4 000 jobs, out of a total of over
10 000, will be affected.                                                       
Shareholders will be kept informed as additional information becomes available  
and are advised to continue to exercise caution when dealing in the Company`s   
Securities until a full announcement is made.                                   
16 July 2010                                                                    
Sponsor to ArcelorMittal                                                        
Deutsche Securities (SA) (Proprietary) Limited                                  
Date: 16/07/2010 13:21:18 Supplied by www.sharenet.co.za                     
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