ArcelorMittal SA reports 20% drop in crude steel production

ArcelorMittal SA average capacity utilisation decreased from 60% in 2021 to 47% in 2022. The reduction in capacity utilisation reflects, in addition to the 12% reduction in apparent steel demand, the impact of the delivery complexities associated with rail service unavailability, labour disruptions and electricity loadshedding, which characterised the South African operating environment in 2022. Current capacity utilisation is 79%.

Crude steel production decreased by 20%, or 618 000 tonnes, from 3,0 million in 2021 tonnes to 2,4 million tonnes in 2022. Crude steel production increased by 29% to 1,35 million tonnes compared to 1,05 million tonnes in the immediately preceding six months.

Strong focus remains on reliability and the restoration programmes. Other priorities include improvement of efficiencies and operating costs, reducing energy and other conversion costs and the debottlenecking of key rolling mills to target import replacement.

For 2022, commercial coke production was 51% lower at 78 000 tonnes, with sales volumes down by 43% at 176 000 tonnes due to the continuing restoration of the coke batteries, and the use of more coke internally due to intermittent production interruptions arising out of the rail service unavailability and labour disruptions.

Sales decreased by 53% to 56 000 tonnes compared to 120 000 tonnes in the immediately preceding six months. Plans are progressing to enable ArcelorMittal South Africa to improve its servicing of the important commercial coke market. An improvement is expected in 2023, with a meaningful impact from 2024 onwards.

ArcelorMittal South Africa reported an EBITDA of R4 274 million against R8 569 million in 2021, while its operating profit decreased from R7 976 million to R3 499 million. The headline earnings of R2 607 million fell from R6 860 million.

EBITDA decreased by 81% to R683 million compared to R3 591 million in the immediately preceding six months.

Revenue increased by 3% to R40 771 million due to a 17% rise in net realised steel sales prices, despite a 13% decrease in total steel sales volumes. Revenue decreased by 16% to R18 596 million compared to R22 175 million in the immediately preceding six months.

The Company’s raw material basket (iron ore, coking coal, and scrap), representing 44% (2021: 43%) of cash cost per tonne, was 38% higher in rand terms, compared to a 14% increase in the international basket.

The local basket was 20% lower (2021: 34% lower) in rand terms against the international basket. The increase in price of the local basket’s imported coal prices exceeded that of the international basket, reflecting a temporary delay in the consumption of the more expensive coal inventory due to a slower steel market, especially in the fourth quarter.

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