AMSA: Blast furnaces C and D experienced chilled hearth conditions
Vanderbijlpark – The Longs steel product operations (“Longs Business”) have been operationally stable for H1 2024, which is particularly praise-worthy of the operating teams given the natural anxieties about the future of the business.
Unfortunately, the Flats steel product operations (“Flats Business”) in Vanderbijlpark experienced notable levels of instability at its blast furnaces in April and May 2024, due to chilled hearth conditions. Blast Furnace C returned to operation on 1 May following a three-week outage, and Blast Furnace D returned on 29 May after a five-week outage.
As the business was preparing for a Q2 2024 shotcrete repair for Blast Furnace C, steel inventory levels had been increased. This increase enabled the continued supply of inventory to customers, while surplus inventory destined for export jurisdictions were mainly re-routed to the domestic market. Overall, some two weeks of sales volumes were lost, which, markets permitting, will be recovered in the second half of the year (“H2 2024”). Procurement supply chains were sharply contracted, and short working hours were applied at those plants that were semi-idled, to manage fixed cost levels. The already intensive cash management actions were further bolstered to preserve liquidity.
Recovery actions for H2 2024 have been devised, and include a well-considered, responsible, and risk-aware rescheduling of the Blast Furnace C shotcrete and hearth repair to later in the year, to aid the normalisation of the supply chain.
With the Longs Business broadly performing within expectations, the financial results for the six months ended 30 June 2024 will be negatively impacted by the difficult domestic and regional trading conditions, and by the two-week sales volume impact and high direct cost of the operational interruptions of the two blast furnaces at Vanderbijlpark.
Due to the intensive cash management actions, the net borrowings position is anticipated to remain within tolerable levels. It is expected that the second half’s performance should be more reflective of the underlying business performance.
