UPDATE: ArcelorMittal S Africa Earnings Down As Demand Dwindles
03 Novembre 2011 - 9:45PM
Dow Jones News
ArcelorMittal South Africa Ltd. (ACL.JO) Thursday reported a
loss in third-quarter earnings on a drop in demand and rising
costs, but said the fourth quarter should bring better results due
to an increase in steel prices.
ArcelorMittal South Africa, an arm of steelmaker ArcelorMittal
(MT), said conditions in the quarter ending Sept. 30 "deteriorated
markedly."
The company posted a loss in headline earnings, a common measure
of profit in South Africa that strips out a number of one-time
items, of 460 million rand for the quarter compared to a gain of
ZAR68 million the year before. The company said steel shipments
also fell by 1%.
ArcelorMittal said that, in the last quarter of the year,
production volumes should rise along with steel prices and that
should lead to an improvement in earnings.
Steel production in the third quarter was 1.18 million tons,
down 28% from 1.64 million tons in the second quarter. "Clearly, we
have lost a lot of production," Gonzalo Urquijo, a member of
ArcelorMittal's group management board, said during the parent
company's quarterly analysts conference call.
He attributed a large part of the roughly 450,000-ton production
loss to three major incidents. First, ArcelorMittal South Africa
suffered a catastrophic failure of its blast furnace dust catcher
in Newcastle in early August. The structural failure resulted in
287,000 tons of lost production at the plant, Urquijo said.
The second major incident was chilled hearth conditions
experienced on blast furnace D in Vanderbijlpark Works during
August, which resulted in steel production loss of about 46,000
tons, Urquijo said.
Lastly, the company had to repair a tap-hole at its Saldanha
works, which resulted in lost production of about 86,000 tons, he
added.
Furthermore the company suffered a foreign exchange loss on
exports, due to a strong rand, which negatively affected its bottom
line, Urquijo said.
ArcelorMittal South Africa expects the repairs to the dust
catcher to be complete in time to start production in early
December. Operations should therefore return to normal by the first
quarter of next year, Urquijo said.
The company also said the arbitration between itself and Kumba
Iron Ore Ltd. (KIO.JO) over a disputed supply agreement following
the loss of ArcelorMittal's mining right to the Sishen iron ore
mine is scheduled for May 2012. The outcome of the hearing between
the Department of Mineral Resources in South Africa and joint
respondents Kumba and ArcelorMittal over the lost Sishen right is
still outstanding.
-By Devon Maylie, Dow Jones Newswires; +27117837848;
devon.maylie@dowjones.com
--Alex MacDonald in London contributed to this story.
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