ArcelorMittal South Africa Reviews Saldanha Works as Loss Surgesby
Steelmaker to impair assets by $272 million as prices drop
Full-year loss seen 22 times, or 12.50 rand a share, bigger
ArcelorMittal South Africa Ltd. said its 2015 loss will be 22 times bigger than the previous year’s as the continent’s largest steelmaker impairs assets and reviews the viability of its Saldanha steelworks.
AMSA, as the Vanderbijlpark-based unit of the world’s largest steelmaker is known, will write down the value of plants and iron-ore assets by 4.3 billion rand ($272 million), including 3.6 billion rand on the Saldanha plant due to “poor international steel-export prices and the extremely high local electricity tariffs,” it said in a statement Thursday. AMSA is also making provision to pay a 1.2 billion-rand penalty to settle several cases with South Africa’s antitrust authorities, it said.
The country’s steelmakers say they are struggling to compete with an increase in subsidized Chinese supplies at prices as much as 25 percent below local production costs while contending with increased input expenses that exceed inflation. The forecast comes less than a month after AMSA sold 4.5 billion rand of shares to settle debt and invest in plants while applying for trade protection from the government.
“The local steel industry continues to be threatened by the weak international steel environment, with imports -- primarily from China -- continuing to enter our local market,” AMSA said. Without trade protection, “the steel industry and the company will need to undertake significant structural change.” it said.
Chief Financial Officer Dean Subramanian will act as the new chief executive officer from Feb. 13 when Paul O’Flaherty steps down, AMSA said. Gerhard van Zyl will act in Subramanian’s place, it said.
AMSA’s loss excluding one-time items for the year through December will be 12.50 rand a share more than the 0.57 rand loss recorded in 2014, it said.