ArcelorMittal SA’s R2bn blast furnace delayed

2014-11-19 11:45

Commissioning of the furnace at ArcelorMittal SA’s Newcastle works has been delayed.

The R2-billion reline, which started in May, was expected to be completed by now – full production was scheduled for mid-November after previous costly delays.

The company announced today that there have been “unforeseen delays which are being attended to urgently in restarting the blast furnace after the reline was completed at the end of October”.

It remains confident it can deliver to most customers during December, and the December shut-down period should ease pressure over the new year.

The Newcastle Works reline was aimed at increasing capacity.

Its recently released results for the quarter to end-September showed how Newcastle’s reline has affected production. Liquid steel production of 340 000 tons was down by 25%.

Local sales of 12 000 tons were down by 3%, largely due to the effect of strike action. Newcastle’s effect on capacity was evident in the 19% decline in export sales to 69 000 tons.

ArcelorMittal, which incurred a net loss of R2.1?billion last year, has numerous challenges including huge potential fines from competition authorities – five cases against it are at the competition tribunal after referral for prosecution by the competition commission – and a potential carbon tax bill of R600?million a year, as well as pressure to reduce prices.

Steel demand has declined by 5% a year since 2007.

Increased competition from China, strikes, electricity shortages and the delay with the refurbishment at Newcastle have all taken their toll.

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