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Options to Ensure Sustainability: ArcelorMittal South Africa – Vereeniging Works
ArcelorMittal South Africa Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1989/002164/06)
Share Code: ACL
ISIN: ZAE000134961
(“ArcelorMittal South Africa”)
Options to Ensure Sustainability: ArcelorMittal South Africa – Vereeniging Works
The South African market has been particularly impacted by the slowdown in local demand for steel
products, which has resulted in increased imports of Chinese flat and long products into a declining
local market. In this economic climate and with the ongoing power, labour and consumable cost
pressures, ArcelorMittal South Africa faces a difficult challenge.
ArcelorMittal South Africa has been implementing various measures to improve its operating and
financial performance, including a restructuring of the corporate services departments. This process
was concluded in 2015.The harsh reality is that the profitability of the operations remain under
pressure.
It was envisaged that a larger portion of the additional volumes of steel from the recently relined
Newcastle furnace would be consumed domestically. However, since the commissioning of the
Newcastle furnace, the local market has been affected by a surge in imports and local demand,
combined with a challenging export market, has been weaker than expected.
This has resulted in the need to consider additional cost saving and optimisation initiatives.
Shareholders are advised that ArcelorMittal South Africa will be exploring further initiatives to
ensure its sustainability. While the closure of some plant cannot be excluded should circumstances
not change, the immediate priority will be a focus on the alternatives that can be implemented to
avoid such a situation. In order to optimise the long steel business, the company is also considering
various options, including moving all billet production from its Vereeniging Works to the newly
relined and more efficient Newcastle furnace. The impact of such an initiative is being assessed
together with other alternatives.
In this regard ArcelorMittal South Africa will be engaging with its stakeholders, including organized
labour and undertaking an industrial footprint review of its Vereeniging Works with a view to
considering alternatives and deciding on whether mothballing some of its plants and placing others
under care and maintenance would be a prudent decision. This initial process is expected to be
completed by the end of August 2015.
Should a final decision be taken to proceed along this path, it will not be taken lightly.
As South Africa’s leading steel producer, the sustainability of the local steel industry remains
ArcelorMittal South Africa’s primary concern and the company will continue to engage its
stakeholders to find lasting solutions to the challenges faced by the industry.
23 July 2015
Vanderbijlpark Works
Sponsor to ArcelorMittal South Africa Limited
J.P. Morgan Equities South Africa Pty Ltd
For further information please contact:
Kesebone Maema, Manager: Corporate Communications, Tel: (016) 889 2425
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