South African steelmakers are seeing few signs of the state’s planned investment in infrastructure projects as a pull-back in mining investment adds to lower demand from construction, ArcelorMittal’s local unit said.
“Slow implementation of infrastructure development projects and the low level of fixed investment in the mining sector continued to hamper growth,” ArcelorMittal South Africa Ltd. said today as it announced third-quarter earnings.
The continent’s largest steel producer posted a profit of 248 million rand ($24 million) compared with a loss of 148 million rand loss a year earlier, the Vanderbijlpark-based company known as AMSA said in a statement today. Sales increased 15 percent and production rose 3 percent as a weaker local currency encouraged exports, the statement said.
The South African government has said it plans an estimated 3.6 trillion rand of projects in energy, transport, water, housing and telecommunications in Africa’s largest economy by 2023. Even so, the National Treasury last month cut its budget for new projects for the year ending March 2014 and said state-owned companies will have to finance their own expansion plans, rather than relying on the government.
“We have seen some pick-up in private residential construction, but non-residential and the big construction projects still remain relatively slow,” Sunil Kumar, head of marketing at AMSA, said on a conference call.
AngloGold Ashanti Ltd., Gold Fields Ltd., Anglo American Platinum Ltd. and Lonmin Plc are among South African mining companies to have cut spending during the last 12 months.
Evraz Highveld Steel & Vanadium Ltd., the South African unit of Russia’s largest steelmaker, said in August domestic demand will lag behind growth in the country’s gross domestic product, which measured 3.3 percent in the second quarter.