ArcelorMittal South Africa (AMSA) CEO Paul O’Flaherty has committed the group to dealing with its “legacy” environmental problems “openly and transparently”, while still pushing ahead with its “fill the mills” strategy, designed to lift production and reverse five years of financial losses at the JSE-listed steel producer.

O’Flaherty, who took over as CEO on July 1, 2014, having previously worked as Eskom FD, confirmed that the company would comply with the Supreme Court of Appeals’ November 26 ruling, stipulating that AMSA hand over a 2002 environment plan to the Vaal Environment Justice Alliance.

The environmental lobby group had resorted to the courts after AMSA refused to accede to a Promotion of Access to Information Act request.

The company had hitherto argued that the plan was an “internal document” that should not be made public. However, it now indicated that it would now comply, notwithstanding a warning that the documents in question were “outdated and irrelevant”, owing to subsequent changes to the environmental framework.

O’Flaherty said AMSA intended to follow up the release of the documents with meetings with nongovernmental organisations (NGOs) and other stakeholders operating in the Vanderbijlpark and Vereeniging areas. He even hinted to the possibility of replicating a model he had observed while at Eskom, where the utility sought to have quarterly interactions with community stakeholders.

The first engagement, which would address aspects of the environmental plan that had been implemented since 2002 and outline future plans, was expected to be held before year-end.

“We intend reaching out and holding an NGO forum as quickly as we can . . . to talk through these issues,” O’Flaherty said, adding that the group had “nothing to hide” and would adopt a “proactive” stance towards stakeholders.

The group, which had been operating for over 75 years, had invested some R1.5-billion over the past five years to address a range of environmental problems, especially those relating to water and air quality.

However, “challenges” remained and environmental GM Siegfried Spanig indicated that projects were being finalised to deal with current and future concerns about the Vanderbijlpark mill’s environmental compliance.

Between R80-million and R88-million would be spent in 2015 to improve water treatment; an investment that would be additional to the R230-million already invested to ensure zero effluent discharge. There were also plans to further rehabilitate, remediate and cap disposal sites so as to reduce dust emissions.

AMSA had not applied to the Department of Environmental Affairs for a postponement to compliance with the Air Quality Act, but additional expenditure would be needed to comply with the standards proposed from 2020 onwards. Spanig said various project options were being interrogated, but the capital estimate was yet to be finalised.

O’Flaherty stressed that there would be “no effect on our production volumes” as a result of the intervention and that the plan to increase capacity remained intact. “So we have a ‘fill the mills’ strategy . . . and we are also investing in increased capacity, but obviously doing so in an environmentally controlled manner.”

A R60-million project had been approved to raise flat-steel output from Vanderbijlpark from 2.8-million tons to 3-million tons and work was under way to assess the feasibility of increasing output further, to 3.3-million tons.

The R2-billion Newcastle reline, which had faced cost and schedule overruns, would also increase the group’s long-steel output from 1.5-million tons to 1.9-million tons.

In parallel, AMSA and other domestic steel producers would seek increased import protection on colour-coated and galvanised flat-steel products, as well as wire rod and rebar.

The approach to the International Trade Administration Commission of South Africa had been made in light of increasingly aggressive exports arising primarily from China – steel producers in Egypt, Turkey and Australia were reportedly seeking similar protection.

O’Flaherty said that AMSA produced products that had been “fundamental” to South Africa’s past growth and remained critical to the success of the country’s infrastructure roll-out. But increasing output and sustaining market share, he indicated, remained core to its current turnaround plans.

“Part of turning this company around is being absolutely transparent with everybody,” O’Flaherty said, adding that the environmental problem was not the only legacy issue to overcome.