http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 16.31Change: -0.01
R/$ = 14.22Change: 0.03
Au 1292.99 $/ozChange: 1.84
Pt 1079.50 $/ozChange: 3.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Feb 07, 2012

Mittal seeks govt approval for N Cape iron-ore acquisition

Back
Africa|CoAL|Exploration|Reinforcing|Resources|Africa|Energy|Steel|Iron Ore|Iron-ore
Africa|CoAL|Exploration|Reinforcing|Resources|Africa|Energy|Steel|Iron Ore|Iron-ore
africa-company|coal|exploration|reinforcing|resources|africa|energy|steel|iron-ore|iron-ore-person



Africa's largest steel producer ArcelorMittal South Africa (Mittal) has completed its due diligence of an unnamed iron-ore exploration prospect in the Northern Cape and would move to buy the resources once it had received the necessary approvals from Mineral Resources Minister Susan Shabangu.

CEO Nonkululeko Nyembezi-Heita did not disclose the acquisition value nor the identity of the counterparty, but indicated that the deal was "imminent".

Once all approvals had been secured the JSE-listed group would move ahead with an exploration and development programme, for which it had budgeted. Nyembezi-Heita indicated that the work was likely to begin during the course of the year.

CFO Rudolph Torlage did not provide a specific capital expenditure (capex) figure, but said it would be sufficient to advance the prospect to a point where Mittal could make a decision on whether or not to invest in a new mine.

Overall, the group was not anticipating that its capex for 2012 would exceed the R1.2-billion of 2011.

The acquisition formed part of the group's programme to secure its own resources of steelmaking materials, including iron-ore and coking coal.

It had also tested coal from Vale's mine, in Mozambique, and would buy some 450 000 t from the operation in 2012. It is also looking for other coking coal opportunities, including through Coal of Africa Limited, in which it had a 15.9% interest.

The group was also engaged in various processes to secure its cost-plus supply of iron-ore from Kumba Iron Ore's Sishen mine. That process received a legal boost in December when Judge Raymond Zondo concurred with Mittal's assertion that the Sishen Iron Ore Company (SIOC) had converted 100% of the rights at the Northern Cape operation and that the Department of Mineral Resources (DMR) had, thus, acted incorrectly by granting a prospecting right over a portion of Sishen to Imperial Crown Trading (ICT).

Arbitration proceedings between Mittal and Kumba on the status of a contested cost-plus 3% supply agreement for 6.25-million tons a year of Sishen material had been put on hold pending the outcome of legal proceedings related to the rights and ICT. The DMR and ICT had lodged an application to appeal Zondo's December ruling, which meant legal proceedings could well continue into 2013.

INTERIM IRON-ORE MISMATCH

Nyembezi-Heita indicated that there was a mismatch between the likely time it would take to resolve the mineral rights dispute and the interim supply agreement between Mittal and Kumba, which was due to endure until mid-year.

Therefore, a new arrangement would need to be negotiated before July, but Nyembezi-Heita refused to be drawn on whether the steelmaker would seek different terms from those prevailing currently.

Immediately following the December ruling, however, Mittal had argued that the judgement served to "confirm our view that SIOC remains obliged to supply 6.25-million tons of iron-ore to us at cost-plus three per cent in terms of our agreement”.

Mittal was paying an average price of $65/t for the material it was sourcing from Sishen, which was well above the $35/t level that would have prevailed under the disputed 2001 supply agreement, which Kumba moved to terminate in 2010. For 2011, Mittal estimated that the differential added R1.1-billion to its iron-ore purchase bill.

Mittal, which reported a R52-million loss in 2011 and a cumulative loss of R720-million in a dismal second half, was experiencing a margin squeeze as raw material and energy costs increased at a rate ahead of its ability to raise prices.

In February, prices were generally rolled over, but some decreases were announced and Nyembezi-Heita indicated that the group was unlikely to be in a position to increase prices during the first quarter, despite some early indications of a recovery in demand.

Nevertheless, the group still expected earnings for the first quarter would improve significantly on better production stability and higher sales volumes. But the performance could be offset by lower international steel prices.

During 2011 production was severely affected by a four-month unplanned shutdown at the Newcastle mill and a 43-day planned shutdown at Saldanha. The Newcastle outage also led to shortages of steel in the local market, particularly reinforcing steel, or rebar.

In total, the group produced only 5.4-million tons of steel in 2011, which was down from the 5.7-million tons of 2010 and well off the 7.1-million achieved in 2006. It also only shipped 4.7-million tons, which was 7% lower than 2010, with exports falling 26% and domestic sales climbing only 3%.

The disruptions coincided with a sharp rise in imports, which rose to 900 000 t, or 19% of the domestic market - the highest level since 1975.

However, the group was optimistic that imports would “normalise” during 2012, as much of the steel imported last year was used to fill the gap left by the production disruptions associated with the Newcastle outage and the Saldanha shutdown.

“We do not see it as an established trend . . . but we will be monitoring it quite closely,” Nyembezi-Heita said.

Edited by: Creamer Media Reporter

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
 
Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Carbon Steel News
Economic Development Minister Ebrahim Patel announced on Thursday that that the International Trade Administration Commission of South Africa (Itac) had recommended the imposition of a tariff duty of 10% on two additional steel products – hot rolled coil (HRC) and...
Article contains comments
The United States, Canada, the European Union, Japan, Mexico, South Korea, Switzerland and Turkey issued a statement on Tuesday calling for urgent action to deal with global steel overcapacity, US officials said. The statement came a day after major steel-producing...
More
 
 
Latest News
Environmental Affairs Minister Edna Molewa
Cabinet has extended the contract of Department of Environmental Affairs (DEA) director-general Nosipho Ngcaba and approved the appointment of Limpho Makotoko as the new DEA COO.     “Under the leadership of Ngcaba, the DEA has consistently received clean and...
Mzwandile Masina
The Department of Trade and Industry (DTI) has invited companies to participate in a trade and investment mission to Ghana and Nigeria from August 8 to 12.   Companies in the agriculture and agroprocessing sectors, built environment professionals, automotive and...
Cabinet has approved the Industrial Policy Action Plan (Ipap) 2016/17 to 2018/19, which seeks to achieve a higher-impact industrial policy in difficult economic circumstances, including the difficulties faced by the domestic steel industry and the drought which has...
More
 
 
Recent Research Reports
Automotive 2016: A review of South Africa's automotive sector (PDF Report)
Creamer Media’s Automotive 2016 Report provides an overview of South Africa’s automotive industry over the past 12 months. The report provides insight into local demand and production, vehicle imports and exports, investment and competitiveness in the sector, as well...
Energy Roundup – April 2016 (PDF Report)
The April 2016 roundup covers activities across South Africa for March 2016 and includes details of a North Gauteng High Court Judge’s dismissal of a court application to postpone the 9.4% electricity tariff increase, which the National Energy Regulator of South...
Electricity 2016: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2016 report provides an overview of South Africa’s electricity sector, focusing on State-owned power utility Eskom and independent power producers, electricity planning, transmission, distribution and the theft thereof, besides other issues.
Energy Roundup – March 2016 (PDF Report)
The March 2016 roundup covers activities across South Africa for February 2016 and includes details of the Department of Energy’s plans to announce the preferred bidders for the first tranche of the coal independent power producer procurement programme; the Council...
Steel 2016: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2016 Report examines South Africa’s steel industry over the past 12 months. The report provides insight into the global steel market and and particularly into South South Africa’s steel sector, including production and consumption, main...
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
 
 
 
 
 
This Week's Magazine
The two spent-fuel pools at Eskom’s 1 800 MW Koeberg nuclear power station, in the Western Cape, will be full by 2018, increasing the urgency on the State-owned utility to begin pursuing alternative storage options. Koeberg has, over the past 32 years, accumulated a...
South Africa lacks the skills necessary to implement the government’s plan to build 9.6 GWe of new nuclear energy capacity, warns nuclear-qualified Quality Strategies International CEO David Crawford. “Apart from the concern about the affordability of the programme,...
DOROS HADJIZENONOS The 700-series devices provide network security monitoring, app control, URL filtering, VPN security, antivirus, antispam, antibot, and advanced intrusion prevention and detection functionality
Cybersecurity multinational Check Point has released its latest 700-series cybersecurity systems for small businesses, which draw on its international threat intelligence to provide up-to-date cybersecurity, says Check Point South Africa country manager Doros...
Daimler Trucks and Buses Southern Africa (DTBSA) saw a marked slip in new-vehicle sales in 2015 compared with 2014, with sales dropping from 5 897 units to 5 300 units. The decline came as the South African new truck and bus market declined from 31 558 units in 2014...
Group of 20 (G-20) economies threatened to penalise havens that don’t share information on their banking clients after the leak of the Panama Papers provoked a global uproar over tax evasion. The G-20 will consider “defensive measures” against financial centers and...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $149 Close
Subscribe Now for $149