SOUTH AFRICA’S STEEL INDUSTRY - Engineering News

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( A R F R I C A ) M Y R I A D R O M A N 1 0 8 0 T R A C K I N G

October 2009

SOUTH AFRICA’SSTEEL INDUSTRY

www.researchchannel.co.za

South Africa’s steel industry 2009 October 2009

Contents

Global market 2 Production 2 Major steel producing countries 2 Major steel producers 4 Iron-ore supply to the steel industry 4 Stainless steel 6 Consumption 6

South African market 7 Production 7 Products 7 Employment 7 Consumption 7 Trade 8 Price fixing 8 Environmental issues 9

Primary carbon steel producers in South Africa 10 ArcelorMittal South Africa 10 Highveld Steel & Vanadium 14 Scaw Metals 16 Cape Gate 18 Cape Town Iron & Steel Works 19

Stainless steel producers in South Africa 20 Columbus Stainless 20

Main sources 21

The material contained in this report was compiled by Martin Zhuwakinyu and the Research Unit of Creamer Media (Pty) Ltd, based in Johannesburg, South Africa. To contact Creamer Media call +27 11 622 3744 or email [email protected].



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Abbreviations

BEE black economic empowerment

Bric Brazil, Russia, India and China

Capex capital expenditure

Cisco Cape Town Iron & Steel Works

DRI Direct reduction iron

EU European Union

ISSF International Stainless Steel Forum

KIO Kumba Iron Ore

Nafta North American Free Trade Agreement

Saisi South African Iron and Steel Institute

US United States





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Global market

Production

World crude steel output in 2008 amounted to 1 326,5-million tons, down from 1351,3-million tons in 2007. This was largely due to the global industry responding to the economic downturn with production cuts, to ensure that supply matched demand. Although this represented a 1,2% decline on the previous year’s production, this was the second consecutive year that production had exceeded the 1,3-billion-ton mark. Nearly all the major steel producing regions, including the European Union, North America, South Africa and the Commonwealth of Independent States reported declines. However, the Middle East and Asia, particu-larly China showed positive growth during 2008.

Major steel producing countries

China is the world’s biggest steelmaker and, in 2008, became the first country to surpass the 500-million-ton mark, producing 500,5-million tons in the year up from the 494,9-million tons produced in 2007, bringing the country’s share of global steel production in 2008 to 38%.

Since April 2009, Chinese production has shown a steady month-on-month increase. In July 2009, the country produced 50,7-million tons of steel, 12,6% up on July 2008’s figure. This was the first time that the Asian giant produced more than 50-million tons in a month, accounting for almost 50% of global production.

International pressure in recent years had seen China taking measures to curb steel exports, including a slew of export rebate cuts and export tax increases. However, falling world demand and declining exports saw the Chinese government reversing direction. In April 2009, it increased export rebates to 13% on a range of higher-value products, mostly flat products, cold-rolled products and coated sheets, and stainless steel. June 2009 saw further products – including hot-rolled coil, hot-rolled plate and heavy sections – receive an export rebate of 9%.

According to World Steel Association statistics, Japan, the US, Russia and India maintained their positions in the top-five bracket in 2008, producing 118,7-million tons; 91,4-million tons; 68,5-million tons and 55,2- million tons, respectively. However, all these countries, except India, produced less crude steel in 2008 than they did in 2007.

The period from January 2009 to June 2009 – when production fell by nearly 41%, to 37-million tons – was the worst half-year for the Japanese steel industry in more than four decades, but there appears to have been an uptick, fuelled by exports to China. The June 2009 production figure of 6,89-million tons represents a 6,3% increase on the previous month’s figure of 6,48-million tons, although it reflects a 33,6% drop, compared with the June 2008 production figure of 10,4-million tons.

The US produced 24,5-million tons during the half-year to the end of June 2009. A 51,8% drop on the previ-ous year’s figure of 50,9-million tons. Few steelmakers expect a return to 2008 output levels in the next five years. The US Metals Report for the third quarter of 2009, released in July 2009, notes that the return of relative stability to the US automotive industry is a cause for optimism, but hastens to add that sentiment cannot be said to be bullish.

In Russia, where production for the first half of 2009 slumped by 30%, to 26,8-million tons, the steel indus-try continues to struggle. However, in July 2009, Prime Minister Vladimir Putin gave the assurance that govern-ment “will try [its] best to stimulate demand for metals …. We will place orders with construction companies, automakers and other traditional [steel] consumers”.

India has experienced steady growth in the steel industry since independence from Britain more than five decades ago and, in the first six months of 2009, produced 27,6-million tons of steel, a slight increase from the 27,2-million tons produced in the six months to June in 2008.

Other significant producers in the steel industry are South Korea, which produced 53,5-million tons in 2008, Germany (45,7-million tons), Ukraine (37,1-million tons), Brazil (33,7-million tons) and Italy (10-million tons).

China’s crude steel output has more than doubled since 2002, when 222-million tons were produced.



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Major steel-producing countries 2007 and 2008

Country 2008 2007

China 1 500,5 1 494,9

Japan 2 118,7 2 120,2

United States 3 91,4 3 98,1

Russia 4 68,5 4 72,4

India (e) 5 55,2 5 53,1

South Korea 6 53,6 6 51,5

Germany 7 45,8 7 48,6

Ukraine 8 37,1 8 42,8

Brazil 9 33,7 9 33,8

Italy 10 30,6 10 31,6

Turkey 11 26,8 11 25,8

Taiwan, China 12 19,9 12 20,9

Spain 13 18,6 14 19,0

France 14 17,9 13 19,2

Mexico 15 17,2 15 17,6

Canada 16 14,8 16 15,6

United Kingdom 17 13,5 17 14,3

Belgium 18 10,7 18 10,7

Iran 19 10,0 20 10,1

Poland 20 9,7 19 10,6

South Africa 21 8,3 21 9,1

Australia 22 7,6 22 7,9

Austria 23 7,6 23 7,6

Netherlands 24 6,9 24 7,4

Czech Republic 25 6,4 25 7,1

Egypt 26 6,2 28 6,2

Malaysia (e) 27 6,1 26 6,9

Argentina 28 5,5 31 5,4

Thailand (e) 29 5,5 30 5,6

Sweden 30 5,2 29 5,7

Romania 31 5,0 27 6,3

Saudi Arabia 32 4,7 35 4,6

Slovak Republic 33 4,5 32 5,1

Finland 34 4,4 36 4,4

Kazakhstan 35 4,3 34 4,8

Venezuela 36 4,2 33 5,0

Indonesia (e) 37 3,6 37 4,0

Luxembourg 38 2,6 38 2,9

Belarus 39 2,6 40 2,4

Greece 40 2,5 39 2,6

Vietnam (e) 41 2,2 42 2,0

Hungary 42 2,1 41 2,2

Others 24,3 24,3

World 1 326,5 1 351,3

(e): estimateSource: World Steel Association



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Major steel producers

There has been significant consolidation in the global steel industry during the last few years, with the $38,3-billion merger between pan-European company Arcelor and Indian company Mittal in 2006. In 2008, ArcelorMittal was ranked as the top steel-producing company, accounting for about 103-million tons of global steel production.

In April 2007, the second-largest merger, entailing the acquisition of Anglo-Dutch steel firm Corus by India’s Tata Steel for $12-billion, was concluded. The company was the world’s eighth-largest steel producer in 2008, producing 24,4-million tons of steel.

Other Indian companies have also expanded in recent years, including Essar, which acquired Canada’s Algoma for C$1,8-billion in 2007. In 2008, Essar produced 3,4-million tons of steel. In the same year, in the US, Gerdau-America completed its $4,2-billion purchase of Chaparral Steel. The company produced 20,4-million tons in 2008.

In 2008, Russia’s Severstal bought into the US steel industry, taking over Sparrows Point and WCI for $80- million and $140-million, respectively. The company’s steel production totalled 19,2-million tons in 2008.

In China, Tangshan and Hangang merged, in June 2008, to form the Hebei Steel group. The group is the biggest steelmaker in China and in 2008 produced 33,3-million tons.

The biggest merger story at the beginning of 2009, was the proposed Russian mega merger involving State-owned nickel-miner Norilsk and several steel producers, including Metalloinvest, Evraz, Mechel and Uralkali, prompted by a need for the companies to refinance their debts. Such a merger would create a company with a market capitalisation of $70-billion to $100-billion.

In spite of all this activity, many commentators insist that the industry is still too fragmented and expect more acquisitions, mergers and alliances to take place as producers seek horizontal integration with other mills and vertical integration with raw material suppliers and steel distributors to secure their futures.

Iron-ore supply to the steel industry

The largest exporters of iron-ore – the key steelmak-ing ingredient – are Australia, which exported 295-

million tons in 2007, Brazil (275-million tons), India (100-million tons), South Africa (28-million tons) and Canada (27-million tons).

Brazilian company Vale; Anglo-Australian group Rio-Tinto and Australia-headquartered BHP Billiton are the world’s biggest iron-ore-mining companies and are currently spending tens of billions of dollars to expand production capacity.

In Brazil’s Pará state, Vale is developing the Carajás Serra Sul project, which, when it comes on stream in early 2012, will boost the group’s output by 90-million tons a year. The project’s price tag is $10,1-billion.

In February 2008, BHP Billiton announced the $4,8-billion Rapid Growth Project 5, in Western Australia, as the next step in its phased growth drive. Production is scheduled to start in the second half of 2011, raising output from 50-million tons to 205-million tons.

In July 2008, Rio Tinto announced plans to invest $2,15-billion in a project to increase production at the Corumbá mine, in Brazil, from two-million tons a year to 12,8-million tons a year. However, the project, initially intended to enter into production in the last quarter of 2010, was delayed owing to weak demand. Subsequently, in January 2009, Rio Tinto entered into an agreement to sell the mine to Brazil’s Vale for $750-million. The acquisition of the iron-ore mining operations was completed in September 2009.

Rio Tinto continues to expand production at its Pilbara operations, in Western Australia, targeting an initial yearly output of 220-million tons, with this figure ex-pected to eventually rise to 600-million tons.

In the longer-term, Rio Tinto plans to an iron-ore in mine Simandow, Guinea, which it calls the world’s largest undeveloped iron-ore province. The resources giant reported in December 2008, however, that it would delay its planned $6-billion investment in the project. Production was scheduled to start in 2013, at eight-million tons a year, ramping up to 70-million tons by 2018.

Despite the challenges in the global economy South Africa’s Kumba Iron Ore (KIO) is sticking to the group’s strategy to grow export iron-ore volumes to 44-million tons by 2013, with the development of its opencast Sishen South mine, in the Northern Cape. Production is expected to start in the first half of 2012 and is expected to peak in 2013. The project, will cost an estimated R8,5-billion.



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Top steel-producing companies 2007 and 2008

2008 2007 2008 2007

1 103,3 1 116,4 ArcelorMittal 41 6,9 40 7,4 Jiuquan Steel

2 37,5 2 35,7 Nippon Steel1 42 6,9 41 7,3 Salzgitter5

3 35,4 5 28,6 Baosteel Group 43 6,8 43 6,9 Voestalpine

4 34,7 4 31,1 POSCO 44 6,5 39 7,8 Jianlong Group

5 33,3 NA 31,1 Hebei Steel Group 45 6,5 44 6,8 BlueScope

6 33,0 3 34,0 JFE 46 6,4 46 6,4 Metalloinvest

7 27,7 11 20,2 Wuhan Steel Group 47 6,4 47 6,4 Beitei Steel

8 24,4 6 26,5 Tata Steel2 48 6,1 60 5,2 Guofeng Steel

9 23,3 8 22,9 Jiangsu Shagang Group 49 6,1 51 6,1 SSAB

10 23,2 10 21,5 US Steel 50 6,0 58 5,4 Erdemir

11 21,8 NA 23,8 Shandong Steel Group 51 5,9 54 5,9 AK Steel

12 20,4 12 20,0 Nucor 52 5,9 52 6,1 Mechel

13 20,4 13 18,6 Gerdau 53 5,7 53 6,0 Nanjing Steel

14 19,2 15 17,3 Severstal 54 5,6 42 7,0 Ilyich

15 17,7 17 16,2 Evraz 55 5,4 61 5,0 Tonghua Steel

16 16,9 14 17,9 Riva 56 5,3 56 5,6 Xinyu Steel

17 16,0 NA 16,2 Anshan Steel 57 5,2 57 5,5 HKM6

18 15,9 16 17,0 ThyssenKrupp3 58 5,1 NA 4,5 Sanming Steel

19 15,0 18 14,2 Maanshan Steel 59 5,0 59 5,3 CSN

20 14,1 20 13,8 Sumitomo Metal Ind 60 4,7 63 4,6 HADEED

21 13,7 19 13,9 SAIL 61 4,5 68 4,4 Tianjin Tiantie Group

22 12,2 23 12,9 Shougang Group 62 4,4 72 4,0 Hebei Jinxi Group

23 12,0 21 13,3 Magnitogorsk 63 4,3 62 5,0 Steel Dynamics

24 11,3 30 9,7 Novolipetsk 64 4,3 69 4,1 Pingxiang Steel

25 11,3 26 11,1 Hunan Valin Group 65 4,3 65 4,5 Ezz Group

26 11,0 27 10,9 China Steel Corporation 66 4,0 71 4,1 Nisshin

27 10,4 22 13,1 Techint4 67 4,0 70 4,1 Tianjin Steel Pipe

28 10,0 28 10,1 IMIDRO 68 3,9 64 4,6 Zaporizhstahl

29 9,9 NA 11,6 Industrial Union of Donbass 69 3,8 NA 3,0 JSW Steel

30 9,9 29 10,0 Hyundai Steel 70 3,7 73 4,0 Lion Group

31 9,8 34 8,8 Baotou Steel 71 3,7 75 3,5 AHMSA

32 9,2 31 9,3 Taiyuan Steel 72 3,7 NA 3,0 ICDAS

33 9,0 33 9,0 Anyang Steel 73 3,6 NA 4,3 SIDOR6

34 8,2 32 9,1 Metinvest 74 3,6 78 3,5 Hangzhou Steel

35 8,2 37 8,1 Celsa 75 3,5 NA 2,7 Hebei Jingye Steel

36 8,1 38 8,1 Kobe Steel 76 3,5 77 3,5 Chongqing Steel

37 8,0 35 8,7 Usiminas 77 3,4 NA 2,7 Commercial Metals

38 7,5 45 6,6 Panzhihua Steel 78 3,4 74 3,6 Essar Steel

39 7,5 50 6,2 Rizhao Steel 79 3,4 79 3,5 Tokyo Steel

40 7,4 NA 7,6 Benxi Steel 80 3,1 NA 3,2 Vizag Steel

(1) - includes part of Usiminas(2) - includes Corus(3) - 50% of HKM included in ThyssenKrupp(4) - includes partial tonnage of SIDOR(5) - includes part of HKM(6) - total productionNA: not applicableSource: World Steel Association



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KIO also reported in July 2009 that it planned on spending R4-billion a year on its capital projects going forward.

Stainless steel

World stainless steel production in 2008 fell by 6,9% on the 2007 figure, to 25,9-million tons, the second year in a row that that world stainless steel production de-creased. The International Stainless Steel forum has at-tributed this decline to the global economic slowdown.

Overall stainless steel production in Asia without China – the largest producing region – declined by 10,3%, to 8,1-million. Asia without China and China now ac-count for about 31% and 27% of global production, respectively. China has been the driving force behind stainless steel production during the past few years, but the country’s production during 2008 declined by 3,6%, to 6,9-million.

In the second-biggest producing region, comprising Western Europe and Africa, production in 2008 dipped by 4,8%, to 8,3-million tons, while the Americas re-gion decreased stainless crude melting by 11,1%, to 2,3-million tons.

Production in Central and Eastern Europe dipped by 8,6%, to 333 000 t.

Over the past few years, the stainless steel market has seen major changes in the types of stainless produced. The sharp increase in nickel prices during 2006 and 2007 saw a shift away from chromium-nickel grades to low nickel or nickel-free grades. Consequently, chromium stainless steels and chromium-manganese grades have become increasingly important.

Consumption

According to the World Steel Association, apparent steel consumption is forecast to decline by 14,9% du-ring 2009, to 1,02-billion tons, compared with a decline of 1,4%, to 1,198-million tons, in 2008.

However, the association expects that demand for steel will stabilise in the latter part of 2009, leading to a mild recovery in 2010.

In the North American Free Trade Agreement (Nafta) region, the biggest decline in steel demand this year is expected to take place in the US, where apparent steel use is expected to fall by 36,6%.

Outside Nafta, Europe will be the most affected region, with a 28,8% decline in the 27-member European Union, or EU27.

Japanese steel use is forecast to fall by 20,4% in 2009.

India is projected to increase apparent steel use by 2% in 2009, and consumption in the Bric countries (Brazil, Russia, India and China) is expected to contract by 5,9%.

Projected apparent steel use for the world, excluding Bric, is down 22,3% in 2009.

China is expected to witness negative growth of 5% in apparent use in 2009, as the prevailing global economic crisis hits the country’s exports, and also as a result of the country’s slowing economy. The last time China’s apparent steel consumption contracted was in 1995, when a decline of 17,2% was recorded, following the real estate bubble burst.

Stainless steel, also known as inox steel or inox, is defined as a steel alloy with a minimum of 11% chromium content by mass. It is this metal chromium added to ordinary steel that gives it a bright shiny gloss and which makes it highly resistant to tarnishing and rusting. This rust-resisting property, which we call “corrosion resistance” is what sets stainless steel apart from most other forms of steel.

Stainless and heat-resisting crude steel production 2007 and 2008 (‘000 metric tons)

Region 2007 2008

Western Europe/Africa 8 669 8 272

Central and Eastern Europe 364 333

The Americas 2 604 2 315

Asia (with China) 16 000 -

Asia (without China) - 8 068

China - 6 943

World 27 836 25 930Source: International Stainless Steel Forum

Apparent steel use 2002–2008 (million tons of finished steel products)

2006 2007 2008

Apparent global steel consumption

1 134 1 214,8 1 198,1

Source: World Steel Association





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South African marketSouth Africa boasts five primary carbon steel pro-ducers: ArcelorMittal South Africa, Highveld Steel & Vanadium, Scaw Metals, Cape Gate, and Cape Town Iron & Steel Works (Cisco). The country also has one primary stainless steel producer, Columbus Stainless.

The primary steel industry is a significant contributor to the South African economy and earns considerable amounts of foreign exchange. In 2008, the country was ranked twenty-first in terms of global crude steel production, by the World Steel Association.

Production

South Africa is the continent’s largest steel producer, ac-counting for 48% of total crude steel production in 2008.

Total South African crude steel production, as re-ported by members of the South African Iron and Steel Institute (Saisi), amounted to an estimated 8,176- million tons in 2008, a decline of 9% when compared with the 8,986-million tons produced in 2007, repre-senting about 0,6% of world production. Of this about 5,5-million tons is consumed domestically.

Carbon steel deliveries by the country’s primary steel industry amounted to an estimated 6,535-million in 2008, a decline of 10,6% on 2007. A total of 5,415- million tons was sold on the local market, representing an increase of 1,7% on the preceding year’s produc-tion. Exports amounted to 1,12-million, a decrease of 43,6% on the 2007 figure.

A total of 1,27-million tons of ferrous scrap was ex-ported in 2008, while 0,086-million tons was imported.

Products

The primary carbon steel products and semifinished products manufactured in South Africa include billets; blooms; slabs; forgings; light, medium and heavy sec-tions and bars; reinforcing bar; railway track material; wire rod, seamless tubes; plates; hot- and cold-rolled coils and sheets; electrolytic galvanised coils and sheets; tinplate; and prepainted coils and sheets.

The primary stainless steel products and semifinished products manufactured in South Africa include slabs, plates and hot- and cold-rolled coils and sheets.

Employment

Employment statistics for 2008 have not been made available, but Saisi reports that, at the end of 2007, its member companies employed 16 482 people permanently. They also employed 16 438 contractors.

Consumption

The biggest South African consumer of steel pro-ducts is the manufacturing sector, which absorbed 2 529 873 t of the total production for the first nine months of 2008. Within the manufacturing sector, the major subsectors in terms of steel product consumption are the structural steel subsector, which accounted for 904 920 t from January to September 2008, compared with 986 215 t for the whole of 2004 and 1 138 192 t for the whole of 2007. The cables, wire products and gates subsector is also a significant component of the manufacturing sector from a steel products consump-tion point of view, accounting for 599 473 t during the first three quarters of 2008. The automotive subsector consumed 257 829 t during the nine-month period – it consumed 349 464 t in 2007.

The second biggest consumer is the building and construction sector, which accounted for 1 220 352 t during the nine-month period.

The mining sector is also a significant consumer of steel products, with its consumption increasing from 146 396 t in 2004 to 164 132 t in 2005, 211 121 t in 2006 and 235 783 t in 2007. Consumption for the first nine months of 2008 came in at 197 717 t. The increase in steel consumption over the last few years is attribut-able to the significant capital investment that has taken place in the sector.

Given the delay or suspension of mining projects, ne-cessitated by the current global economic slowdown, it is expected that the mining sector’s steel demand in 2009 will be dented.

In fact, several manufacturing subsectors will be affected by the economic squeeze, with the automotive subsector, for instance, having said vehicle production and, therefore, demand for steel products, will decline in 2009.



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Trade

South Africa is a net exporter of steel products, with the rest of Africa accounting for 37% of total exports in 2008, according to Saisi. Other major export markets are the Far East and the EU27, each of which accounted for 22% in 2008, South America (5%), the Middle East (6%), and Nafta countries and African island nations (4% each).

A staggering 50% of the carbon, alloy and stain-less steel products imported into South Africa in 2008 emanated from the Far East, with the EU27 accounting for 43%, the Middle East 3%, and the Nafta member countries 2%. Eastern Europe, the

former Soviet Union and the rest of Africa accounted for 1% each.

Price fixing

Following an investigation into potential collusion in the steel industry, which was initiated in April 2008, the Competition Commission has recommended that the Competition Tribunal impose administrative penalties against ArcelorMittal South Africa, Cape Gate and Cape Town Iron & Steel Works.

The three steel producers could face penalties totalling 10% of their annual turnover in South Africa and their

Sales of primary carbon steel products to industrial groups (metric tons)

2004 2005 2006 2007 2008 (9 months)

Mining 146 396 164 132 211 121 235 783 197 717

Total manufacturing 2 534 169 2 327 706 2 889 090 3 065 929 2 529 873

Packaging 260 673 256 443 264 036 256 744 190 088

Structural steel 986 215 895 524 1 117 162 1 138 192 904 920

Agricultural 38 555 33 048 44 061 57 091 49 044

Automotive 314 152 290 375 362 006 349 464 257 829

Electrical apparatus/white goods 49 481 47 294 66 199 74 500 60 075

Cables, wire products and gates 647 089 588 843 713 227 711 286 599 473

Fasteners 57 113 50 576 67 205 75 643 62 310

Other 180 913 165 603 255 194 403 009 406 134

Building and construction 967 913 955 102 1 235 743 1 422 824 1 220 352

Unallocated 866 075 791 714 1 007 569 612 532 584 503

Total 4 514 553 4 238 653 5 343 523 5 336 888 4 532 445

Source: South African Iron and Steel Institute (Note that Saisi was unable to provide statistics for the last three months of 2008 because of the price-fixing investigation that has been initiated against its members.

South Africa’s primary steel imports per region – 2008

Source: South African Iron and Steel Institute

Africa1%

E Europe & FSU1%EU 27

43%

Far East

Islands (Africa)0%

Middle East3%

Nafta2%

Other W Europe0%

South America

Unspecified0%

50%

South Africa’s primary steel exports per region – 2008

Source: South African Iron and Steel Institute

Africa38%

E Europe & FSU0%

Far East

Islands (Africa)

Middle East6%

Nafta3%

Other W Europe0%

Unspecified0%

4%

22%

South America5%

EU 2722%



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exports from the country in the preceding financial year.

Research conducted by the Commission has suggested that the steel mills have been charging local customers at around import parity price levels since 2002, despite the fact that South Africa is a net exporter of steel.

A fourth steel producer, Scaw South Africa, following a search-and-seizure operation, applied for corporate leniency for price fixing and market allocation in relation to rebar and wire rod.

Environmental issues

Both ArcelorMittal South Africa’s Vereeniging plant and Highveld Steel & Vanadium’s operations were, in 2007,

found by government inspectors to be noncompliant with environmental legislation. However, ArcelorMittal reported, in February 2008, that its board had ap-proved projects with a price tag of R150-million aimed at reducing dust emissions. The company said it was already complying with a government directive to stop dumping material waste into an unlined dump site and was now disposing of its waste at Holfontein, an ap-proved disposal site.

At Highveld Steel & Vanadium South Africa’s environmental management inspectors, the Green Scorpions, found “serious environmental transgressions” at its Vanchem operation. The inspection found excessive sulphur dioxide and ammonia emissions, as well as contamination of groundwater.

ArcelorMittal South Africa has reached an agreement with gold producers Harmony and DRDGold regarding the settlement of their long-running dispute around the pricing of flat steel products in the South African market.

The agreement between the parties was reached without any admission of liability on the part of

ArcelorMittal South Africa, and the parties have agreed to keep the terms of the settlement confidential.

There will be no further hearings at the Competition Tribunal about the case, following the settlement.

DRDGold and Harmony have said in a joint statement that the settlement agreement reached will permit the goldminers to focus their energies and resources on their core businesses, and represents a satisfactory outcome tothe matter for them

The complaint was initially lodged with the Competition Commission in 2002, with the gold miners claiming that ArcelorMittal South Africa had abused its dominant position in the country’s flat steel market by charging excessive prices, to the detriment of consumers.

The case has been before the Competition Tribunal since 2004, with a finding delivered in 2007, which pinned ArcelorMittal South Africa with an R691,8-million fine.

However, the steelmaker appealed against the decision, which led to the Competition Appeal Court referring the case back to the Competition Tribunal.

The Competition Tribunal has also said that it is likely that the case at the Tribunal will be withdrawn, as there are no respondents left to pursue the case.

ArcelorMittal South Africa excessive pricing case





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Primary carbon steel producers in South Africa

ArcelorMittal South Africa

ArcelorMittal South Africa is the biggest producer of steel on the African continent, with a production capacity of about eight-million tons of liquid steel a year. About 65% of the company’s stock is held by foreign investors, including ArcelorMittal group, with a 52% interest. The largest domestic shareholders are the Public Investment Corporation and the Industrial Development Corporation, with 8,95% and 8,79% respectively at the end of 2008.

ArcelorMittal South Africa has four major steel op-erations. The Vanderbijlpark and Saldanha facilities produce flat steel products, of which the company is the largest supplier in Africa. The other two operations, at Newcastle and Vereeniging, produce long steel pro-ducts. The company has also recently acquired two mills in Mozambique.

KIO supplies ArcelorMittal South Africa with about 90% of its iron-ore requirements on a cost-plus basis, in terms of a 25-year preferential supply agreement. This agreement followed the 2001 unbundling of Iscor’s iron-ore mines to form JSE-listed Kumba Resources, now KIO. The balance of AreclorMittal South Africa’s iron-ore requirements are acquired through commercial arrangements. ArcelorMittal South Africa also has the right to participate in Kumba’s expansion projects, as long as it can demonstrate that it can use the ore in its South African mills.

ArcelorMittal South Africa is currently locked in a confidential arbitration process with KIO regarding its participation in the miner’s Sishen South project.

The arbitration process to participate in KIO’s Sishen South mine is expected to be concluded by late this

year or early in 2010. The two companies agreed to the confidential arbitration process to resolve “key differences of interpretation” regarding a 2007 Sishen supply agreement. The hearings into the matter started in June 2009.

ArcelorMittal South Africa is hoping to source about four-million tons a year of the nine-million tons a year project. If the company is successful in its arbitration, ArcelorMittal South Africa will have to fund a percent-age of the mine development capital expenditure, equal to its four-million tons a year share of the project.

ArcelorMittal’s capital expenditure programme

ArcelorMittal South Africa has cut back on its capital expenditure (capex) plans in the wake of the impact that the economic crisis has had on demand for steel products, both globally and in South Africa. The com-pany had planned to boost its output of liquid steel from its current nameplate capacity of eight-million tons to ten-million tons by 2013.

These plans have now been postponed and will only be revisited when the market for steel returns to a sustain-able growth situation. Even then, each project will be re-evaluated on whether it is still needed in a post-crisis market environment. The company has not given any timelines for a resumption of the growth plan given the continued volatility in global and domestic steel markets.

The biggest project that will have to be re-evaluated is the N6 blast furnace at Newcastle, the cost of which has been estimated at between R2,5-billion and R3-billion.

Other projects that have been postponed include galva-nising and colour lines at Newcastle and Vanderbijlpark.

The global economic downturn has had implications for ArcelorMittal’s proposed capex project.

The cost of the company’s capex programme in 2008 was stated at R11,8-billion. In addition to the growth orientated projects the company had also planned to generate its own electricity in gas-powered cogeneration power stations at a cost of about R4-billion.

However, owing to the global economic crisis ArcelorMittal South Africa will now limit its capital investment strategy to projects that improve the safety of the operation or that are required in terms of its environmental commitments. In 2009, its total capex budget has been set at R1-billion, which also includes maintenance expenditure. In 2008 and 2007 the company had spent just over R1,8 billion each year on capital projects.

ArcelorMittal’s capex



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However, most of the projects that had been started as part of the capex programme were completed in 2008 or are nearing completion. They include the construc-tion of two new direct reduction iron, or DRI, kilns at Vanderbijlpark, which were completed in June 2009. They are responsible for the bulk of the R800-million spent at Vanderbijlpark over the past year and a half. The rest was spent on a sinter off-gas treatment plant.

On the environmental front, the R110-million installa-tion of dust extraction systems at Vereeniging Works’ steelmaking plant is on track for completion in 2010, and the Coke Gas and Water Cleaning project at Vanderbijlpark, which has experienced some commis-sioning delays, will be operational before the end of 2009 and reduce sulphur-dioxide emissions by 46% at the operation.

Black economic empowerment

In June 2009, ArcelorMittal South Africa launched a pilot R30-million three-year preferential procurement initiative and stated that this should not be read as a signal that it was concentrating on the nonowner-ship elements of South Africa’s empowerment codes and that it was possible that a corporate-level black economic-empowerment (BEE) transaction could still be pursued.

Any future BEE deal, however, will be as broad based as possible and could include staff, surrounding communities and a possible strategic empowerment partner.

The R30-million scheme will be used to procure en-gineering and manufacturing goods and services from small and medium-sized companies, with particular focus on black-owned companies in the communities in which the company operates. It will be launched at the group’s Vanderbijlpark works and then rolled out to its other business units in Saldanha Bay, Vereeniging and Newcastle.

Three suppliers have already been selected for the first initiative, including Commit Engineering, a black-women-owned company specialising in medium to heavy general engineering and fabrication, as well as the installation and maintenance of air-filtration systems and conveyors; Tunnel Engineering, a black-owned general engineering firm with expertise in turn-ing, milling, drilling, hydraulics and welding; and Hencill Engineering, a supplier of services and products related to steel fabrication, steel manufacturing and repairs. The company says it is committed to expanding the

procurement programme beyond engineering services, and to territories outside Gauteng.

Associated skills training and other support measures will also be deployed by the steelmaker as it expands the scheme, with the aim of increasing the number of black-empowered suppliers, promoting supplier com-petitiveness and removing supply constraints.

In the meantime, the group will continue to pursue a range of initiatives to improve its overall rating under government’s broad-based black economic- empowerment codes of good practice, where pre-ferential procurement is a key component. The other elements are management control, employment equity, skills development, enterprise development and socio-economic development.

Steel prices

ArcelorMittal South Africa has, since the middle of 2009, introduced steady increases in steel prices, after steel prices fell by more than 60% at the onset of the global economic crisis in September 2008.

In August 2009, the steelmaker announced that the prices of its flat steel products would increase by be-tween 2% and 4% in October 2009, while the prices of its long products would remain unchanged.

The steelmaker increased prices by between 3% and 5% in July and August 2009, while the prices of only some of its flat steel products increased by between R250/t and R750/t in September 2009.

Operations

The company has four major steel operations in South Africa, namely Vanderbijlpark, Saldanha, Newcastle and Vereeniging. The Vanderbijlprk and Saldanha flat steel products plants together are capable of producing 5,6-million tons of liquid steel a year, mak-ing them the largest suppliers of this commodity in Africa. The company’s Newcastle and Vereeniging operations service some 50% of the local market for long steel products, while also exporting products inter- nationally. The two mills have capacity for total yearly sales of 2,2-million tons, 20% of which is exported. Of the remainder, about 1,6-million tons comprises rolled profile products, 90 000 t seamless tube and 20 000 t forged products.

ArcelorMittal also owns a coke-and-chemicals plant in South Africa and two steel mills in Mozambique.



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The company’s steel products are marketed interna-tionally through Macsteel International, a joint venture with the Macsteel group, in which ArcelorMittal South Africa holds a 50% interest.

Offices in major centres in Europe, North America, South America, Asia, the Middle East and Africa pro-vide the company with a worldwide infrastructure for the marketing and distribution of its products.

Vanderbjilpark

The Vanderbijlpark operation, in Gauteng province, is one of the world’s largest inland steel mills and the largest supplier of flat steel products in sub-Saharan Africa. The ISO 9002- and ISO 14001-accredited plant employs some 4 500 people.

The plant’s steel products are manufactured in an inte-grated process. Raw materials such as iron-ore, coke and dolomite are charged to blast furnaces, where they are converted into liquid iron. The liquid iron is refined in basic oxygen furnaces and electric arc furnaces to produce liquid steel. The liquid steel is cast into slabs, which are hot-rolled into heavy plate in a plate mill, or into coils in a strip mill. The coils are either sold as hot-rolled sheets in coil or processed further into cold-rolled and coated products, such as hot-dip galvanised, electrogalvanised and prepainted sheet and tinplate.

The Vanderbijlpark plant boasts two blast furnaces, three electric arc furnaces and three basic oxygen furnaces.

Saldanha

The Saldanha plant, a largely export-focused plant, is in close proximity to the deep-sea port of Saldanha and employs 568 staff. The plant produced its first hot-rolled coil in late 1998 and is currently producing at its nameplate capacity of 1,2-million tons a year. The ISO 9002- and ISO 14001-accredited plant is the only steel mill in the world to have successfully combined the Corex/Midrex process into a continuous chain– replacing the need for coke ovens and blast furnaces, and making the plant a world leader in emission control and environmental management.

Facilities and technologies at the Saldanha plant were specifically designed to produce ‘clean’ steel, with vir-tually no impurities like tin and copper. The continuous production chain is exceptionally short, taking only 16

hours from the time iron-ore enters the Corex or Midrex units to the rolled product.

Vereeniging

The Vereeniging operation is the country’s major sup-plier of speciality steel products, seamless tube and forge products. The ISO 14001-certified plant employs 908 staff and produces 400 000 t/y of final product, of which some 32% is exported. It supplies input mate-rial for the manufacture of safety-critical components for the automotive industry, seamless tube for the petrochemicals, oil and gas industries and wire rod for fencing and hoisting rope used in deep-shaft mining.

The manufacturing facility consists of a rotary hearth furnace, a cone-type rotary piercer and a multistrand pipe mill. In addition, it has a 22-strand stretch reducer followed by two straighteners, cutting and bevelling facilities, as well as an EMI and ultrasonic testing unit.

Forge products include an extensive range in sizes from 90 mm to 1 400 mm. The Vereeniging plant produces rounds, squares, flats, thick-wall tubes, step-forgings, rings, disks and blocks. Products are supplied in the ‘as-forged’ condition or heat-treated to specification. Special profiles, which are produced at a scaled-down Pretoria operation, include a range of window sections used for making residential and industrial windows. Other products include Y and I standard fencing posts, T-section droppers and palisade fencing sections.

The Vereeniging operation uses an electric arc furnace in its manufacturing of profile products from scrap and directly reduced iron.

Newcastle

The Newcastle plant, located in the northern part of South Africa’s KwaZulu-Natal province, is the coun-try’s foremost supplier of profile products. It employs 1 850 people and produces 1,6-million tons of final product, of which a fluctuating percentage is exported to international markets. The profile products pro-duced include low- and medium-carbon commercial grades, low-carbon rimming steel substitutes, sulphur containing free-cutting steels, microalloyed steels, high-carbon wire-rod steels and low-, medium- and high-alloy steels.

Sizeable capital expenditure has been invested for the extensive refurbishment of the plant and to introduce



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sophisticated information systems. This has optimised operations and sustained global competitiveness at all levels.

This ISO 9002-, 14001- and 18001-listed plant is an in-tegrated operation that produces rolled steel from iron-ore through a blast furnace route. The plant has three coke oven batteries, one sinter plant, one blast furnace, two basic oxygen furnaces and four rolling mills.

ArcelorMittal Coke & Chemicals

ArcelorMittal Coke & Chemicals’ core business is the production of commercial coke for the ferroalloys industry from coke batteries located in Pretoria, Newcastle and Vanderbijlpark. The business also ben-eficiates metallurgical and steel by-products, which, besides others, include coal tar. All ArcelorMittal Coke & Chemicals plants are ISO 9001, ISO 14001 and OHSAS 18001 listed.

Mozambique steel mill

The depressed economic climate led to the closure, in September 2009, of the ArcelorMittal South Africa mill in Maputo. The steelmaker also said high raw material costs and electricity tariffs made the operation unviable. The company had opened the refurbished rod mill in June 2008, as part of its strategy to grow a sub-Saharan Africa footprint and to ensure a presence in the fast expanding Mozambican economy. During the 2008 financial year, the mill produced only 5 150 t at a significant loss to the company.

The mill is one of the two mills acquired by ArcelorMittal South Africa from the Mozambican government for $11,4-million in 2006.

ArcelorMittal South Africa’s Mozambican customers will now be supplied through the company’s South African operations, particularly the Newcastle plant.

Shareholding structureAbout 65% of ArcelorMittal South Africa’s stock is held by foreign investors, including ArcelorMittal’s 52,02% interest. The biggest domestic shareholders are the Public Investment Corporation, with 8,95%, and the Industrial Development Corporation, with 8,79%.

Group revenueR39,9-billion (December 2008).R29,3-billion (December 2007).

Group profitR12,16-billion (December 2008).R7,7-billion (December 2007).

LeadershipNonkululeko Nyembezi-Heita, CEO BSc (Hons) (Elec Eng), MSc (Elec Eng), MBA.Luc Bonte, president, MSc (Elec Eng), PhD (Applied Sciences), MBA. Khotso Mokhele, nonexecutive chairperson BSc (Agric), MS (Food Science), PhD (Microbiology).

Nonexecutive DirectorsDavinder Chugh, BA LLB, BSc (Hons), MBA (India).Christophe Cornier, MSc (Ecole Polytechnique), MSc (Ecole des Mines).Eric Diack, BAcc, CA (SA), AMP (Harvard).

Lumkile Mondi, BCom (Hons, Economics), MA (Economics) (Eastern Illinois University).Chris Murray, BCom, CA, MBL.Johnson Njeke, BCom, BCompt (Hons), CA (SA), Higher Dip in Tax Law.Sudhir Maheswari, BCom (Hons), CA CS.Noluthando Orleyn, BJuris, BProc, LLB, PhD Hons.Arnaud Poupart-Lafarge, BEng, MSc (Economics).

Executive DirectorsKobus Verster, executive director: financeBCom, Bcom (Hons), MBL, EMP (Darden).

Contact detailsPostal addressPO Box 2Vanderbijlpark1900South Africa

Telephone: +27 16 889 9111

Fax: +27 16 889 2472

Website: arcelormittalsa.co.za

ArcelorMittal South Africa



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Highveld Steel & Vanadium

Highveld Steel & Vanadium, which is now almost 85%-owned by Russia’s Evraz group, is South Africa’s second-largest producer of carbon steel. The European competition body approved the merger between Highveld Steel & Vanadium and Evraz in 2007, on condition that Highveld dispose of part of its stake in the Mapochs iron-ore and vanadium mine as well as its Vanchem operation, to avoid competition concerns at all levels of the vanadium value chain.

South Africa’s Competition Tribunal has since approved the sale of Highveld’s Vanchem operations to Swiss firm Duferco Investment Partners’ Vanchem Vanadium Products. Vanchem Vanadium Products has also acquired Highveld’s 50% stake in South Africa Japan Vanadium and 350 ordinary shares in the Mapochs mine, which produces titaniferous magnetic ore for Highveld and ore fines for Vanchem.

Operations

Iron and steelworks

The steelworks, near Witbank, consists of an iron- making division and a steel plant. Steel is converted into a variety of hot-rolled steel products, including plate, coil, structural sections, slabs and billets. Vanadium-bearing slag is coproduced with iron from magnetite iron-ore. Highveld Steel & Vanadium’s products are sold locally and abroad, and the major export markets are Austria, which accounted for 42% of export revenue in 2008, followed by the US (24%), the UK (12%), the Netherlands (5%), the United Arab Emirates (3%), and

Belgium, Brazil and Canada, each of which contributed 2% to export revenue.

During 2008, Highveld Steel & Vanadium produced 299 522 t of plate (compared with 197 630 t in 2007), 153 237 t of coil (2007: 208 825 t), 207 172 t of sec-tions (2007: 330 076 t) and 65 725 t of vanadium slag (2007: 65 673 t).

Mapochs mine

The Mapochs mine, in Mpumalanga, is an opencast operation that produces titaniferous magnetic ore and ore fines. Hitherto an independently managed division of Highveld, the mine is to be transferred into ‘Mapochs Newco’ following a R540-million empowerment deal in terms of which Umnotho we Sizwe is to acquire a 26% interest in the mine.

The deal is in line with South Africa’s Mineral and Petroleum Resources Development Act, which stipu-lates that previously disadvantaged South Africans participate in the ownership of mining operations seek-ing mineral and mining rights.

The transaction is still subject to certain conditions, and will involve the sale of a 23% stake in Mapochs Newco to Lakhka 81, the name of which is to be changed to the Umnotho Iron & Vanadium special-purpose vehicle, with the remaining 3% going to the Mapochs Mine Community Trust.

The transaction will come into effect on July 1, 2010, or on the last business day of the calendar month in which the conditions are fulfilled.

Highveld Steel & Vanadium announced in March 2009 that it was revising its production and capital expenditure plans for the year, owing to slowing global steel consumption. However, the extent of the production and capex cuts was not stated.

In its 2007 annual report, Highveld stated that it intended to raise its capex from about R750-million, with this expenditure directed towards increasing steel production to the mill’s one-million-ton-a-year nameplate. The capex programme was to also entail envi-ronmental projects to ensure full compliance with air and water quality legislation.

Highveld Steel & Vanadium capital projects



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ShareholdingEvraz (85,11%) (majority shareholder).

Group revenueR9,3-billion (December 2008).R7,158-billion (December 2007).

Group profit 2,5-billion (December 2008).R1,9-billion (December 2007).

LeadershipWalter Balandino (CEO).T Shongwe, chairperson BA (Econ), MBA, ACIS, FCIBM, LDP.

Independent DirectorsCB Brayshaw, CA (SA), FCA (England and Wales).

Nonexecutive DirectorsGC Baizini, (Italian), MA (Hons) (Physics), Summer MBA, Diploma in Industrial Engineering. JW Campbell, BSc (Mathematical Physics), MA (Engineering Management).

AV Frolov, (Russian), Hons Nuclear Physics, PhD Physics and Mathematics. GA Mannina (Swiss), Major in Business Administration.PS Tatyanin, (Russian) Master’s in Economics.

Executive DirectorsBE de Beer, Chief financial officer, BCompt, financial director.

CI Lewis, company secretary, BLC, BA, BProc, LLB, LLM (Law of Contract), LLM (Corporate Law), Certificate in Environmental Law.

Contact detailsPostal address:PO Box 111Witbank1035South Africa

Telephone:+27 13 690 9033/32

Website: www.highveldsteel.co.za

Highveld Steel & Vanadium



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Scaw Metals

A wholly owned Anglo American subsidiary, Scaw Metals group is a manufacturer of a wide range of steel products, with operations in South Africa, Namibia, Zambia, Zimbabwe, Canada, Australia and North America. These operations are housed in two compa-nies, Scaw South Africa and Scaw International.

Scaw Metals also owns Ozz Industries, in South Africa; Moly-Cop, which produces forged sheet heat-treated grinding media in several locations across the globe; Canada’s AltaSteel, a scrap-based mini mill operation with melting and continuous casting facilities, a bar rolling mill and a grinding rod heat-treating facility; Consolidated Wire Industries, a 50:50 joint venture with ArcelorMittal that produces mild steel wire in both black and galvanised finish; and a 50% stake in Chile-based cast steel grinding media manufacturer Proacer.

Operations

Rolled products

Scaw’s operation in Germiston, east of Johannesburg, South Africa, boasts two rolling mills: one producing low- and high-carbon wire rod and merchant bar, and the other light and medium sections.

The combination bar mill has a 100-t/h walking beam reheat furnace, 21 stands in line and two outlets, a cooling bar for straight products of up to 76 mm in diameter and a ten-stand high-speed wire rod mill with controlled cooling facilities for wire rod of up to 18-mm diameter.

The section mill has a three-high tilting table break-down mill and one two-high sizing mill that feeds either a medium section train that produces channels and equal and unequal angles or a ten-stand continuous small section and bar train for small angles and flats.

Steel is produced in an 85-t ultrahigh power-eccentric bottom tapping type arc furnace and ladle furnace combination that feeds a three-stand, high-speed continuous billet-casting machine. The caster is equipped with convex water-cooled moulds that allow for high casting speeds and electromagnetic stirring systems. The melt shop uses a high proportion of

directly reduced iron (DRI) in its furnace charge. The DRI is produced from three coal-based rotary kilns at the Germiston operation.

Grinding media

Scaw has a specialised foundry facility at the Germiston operation that produces heat-treated high-carbon, high-chromium iron grinding media for use in platinum, copper, coal, gold and regrind applications, as well as a forged steel grinding media plant. The company’s grinding media operations in Chile, Peru, Mexico and Canada produce a range of forged steel, heat-treated grinding media and have a total installed capacity of more than 700 000 t/y.

Cast products

The foundry at the Germiston operation, one of the big-gest foundries in the southern hemisphere, produces castings with a finished weight of up to 30 t. It is a lead-ing supplier of single-piece, thin-walled locomotive and passenger frames, freight car components and high-integrity cast steel railway wheels. The facility holds the American Association of Railroads’ approval for the manufacture of freight car side frames, bolsters and cast steel wheels. Other products include large gear segments, high-carbon, high-chromium, abrasion-resisting coal grinding elements for coal-fired power stations, high-chromium iron mill liners and impact crushing parts, stainless-steel coiler drums, and slag ladles for the metal processing industry.

Arc furnace melting units and a 25-t-capacity ladle vacuum degassing unit serve the foundry where steels can be produced with lower sulphur, nitrogen, oxygen and hydrogen contents, particularly necessary for the manufacture of high-strength, low-alloy steels.

Scaw’s other South African foundry, in Benoni, manu-factures a wide range of earthmoving components under licence from Esco Corporation of the US and general engineering products in plain and low-alloy steels of up to 8 t finished mass. Other products include manganese wear components for gyratory crushers.

Wire rod products

Scaw’s wire rod plants are located in South Africa, Zimbabwe, Zambia and Australia. The main Steel Wire Rope operation, in Johannesburg, is an inte-grated wire mill and ropery plant that manufactures specialised ropes. Smaller factories are in Zimbabwe and Zambia.

In October 2009, Anglo American announced that it will sell noncore assets, including Scaw Metals, to focus on its core mining activities.



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The Wire and Strand operation in Germiston has three major product lines: prestressed concrete wire and strand, mining commodity rope and high-carbon wire. Synthetic and natural fibre ropes are manufactured at the Fibre Products factory in Durban, South Africa, for use as cores in steel wire rope and for mining, marine and agricultural applications.

The chain operations in South Africa and Australia pro-duce a range of carbon and alloy steel chains and fittings used extensively in mining, forestry, agriculture, fishing, offshore oil exploration and other industrial applications.

The Jupiter Steel Wire Rope operation is the world’s largest integrated wire mill and ropery plant, manufac-turing a wide range of the Haggie brand of specialised ropes.

Scrap processing

Steel scrap is delivered to Scaw South Africa’s Union Junction operation, where it is cleaned, shredded and processed before being passed on for manufacture and conversion into a wide range of value-added steel products.

Shareholding structureScaw South Africa’s shareholders include a BEE consortium that holds 21% and an employee share ownership trust that holds 5%. Anglo American holds the balance of the shares.

LeadershipNorman Mbazima (CEO).Christopher Davis, chief financial officer.

Contact detailsPostal Address:

P O Box 61721Marshalltown2107South Africa

Telephone: +27 11 621 1555

Fax: +27 11 621 1590

Website: www.scaw.co.za

Scaw Metals



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Cape Gate

Cape Gate is a manufacturer and distributor of steel, wire and wire products that serves the mining, agricul-ture, industrial, civil engineering and construction and commercial sectors, both in South Africa and abroad. Since its inception in 1962, the company has grown into a producer of wire and steel products with its own source of raw materials.

Operations

Davsteel

Davsteel, which is based in Vanderbijlpark, operates two steel shredding units, and the finished products

are wire rod, reinforcing bar, mild steel rounds, bars for mine roof bolts, angles, flats and squares.

Sharon Wire Mill

Sharon Wire Mill processes wire rod into hard drawn wire, annealed wire, hexagonal wire netting, diamond mesh, gabions, barbed wire, spooled baling wire, field fence, straightened and cut galvanised and uncoated wire, prepackaged wire products and mini coils.

Orenwire

Orenwire manufactures medium- and high-carbon wire and a range of steel wire ropes.

LeadershipNathan Friedman, chairman.Erwin Baldé, co-chairperson, group financial director.Pikkie Coetzee, CEO.

Nonexecutive directorsBoudewyn Eras.Oren Kaplan.Robert Kaplan.

Executive directorsMartin Friedman, steel.Cedric Harris, operations, steel.Geoff Homes, technical.Mendel Kaplan.Dawie Oberholzer, operations, steel.

Coen Otto, wire.

Contact detailsPostal addressPO Box 54Vanderbijlpark1900South Africa Telephone: +27 16 980 2307

Fax: +27 16 980 2467

Website: capegate.co.za

Cape Gate



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Cape Town Iron & Steel Works

Cape Town Iron & Steel Works (Cisco), a wholly owned subsidiary of JSE-listed engineering and con-struction group Murray & Roberts, is a scrap-based mini mill producing reinforcing steel in billet and bar forms.

The company has been in existence for about 40 years, operating from its original site in Cape Town.

It manufactures and supplies reinforcing billets and bar to the Southern African region and to selected interna-tional markets.

Operations

Cisco’s melt shop has a rated capacity of 300 000 t/y of billets. Its rolling mill provides production flexibility and consistent product quality, meeting recognised international specifications and standards.

LeadershipJimmy Windt (GM).

Contact detailsPostal addressPO Box 121Kuilsrivier 7579South Africa

Telephone: +27 21 903 2141

Fax: +27 21 903 9495

Website: www.cisco.co.za

Cape Town Iron & Steel Works





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Stainless steel producers in South Africa

Columbus Stainless

Stainless steel producer Columbus Stainless, which is based in South Africa’s Mpumalanga province, is 76%-owned by Spain’s Acerinox, with the re-mainder held by Samancor (a joint venture between Anglo American and BHP Billiton) and the Industrial Development Corporation of South Africa.

Operations

Columbus Stainless’s fully integrated, single-site plant boasts a steel plant, hot-rolling facilities, cold-processing facilities, a plate section and finishing lines.

The plant has an electric arc furnace with a liquid metal capacity of 850 000 t/y and hot-rolling and cold-rolling mill capacities of 70 000 t/m and 36 000 t/m respectively.

Columbus Stainless is expanding its cold-rolling mill capacity by 25%, to 45 000 t/m, to enable it to process more of its current excess hot-rolled coils by installing a new mill designed for thin gauge, bright anneal quality stainless steel, cold rolled coil and installing a degreasing section on the final annealing and pickling line for improved surface quality of the cold rolled coils.

Columbus Steel capital projects

LeadershipDavid Martin (CEO).

Shareholding structureAcerinox 76%.Samancor 12%.Industrial Development Corporation 12%.

Contact detailsPostal addressPO Box 133Middelburg

1050South Africa

Telephone: +27 13 247-9111

Fax: +27 13 246-1681

Website: www.columbus.co.za

Columbus Stainless



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Main sourcesArcelorMittal press release: ArcelorMittal SA confirms closure of its Maputo rolling mill on 4/9/2009 (September 11, 2009).

Associated Press. Putin promises help for Russian steel industry (July 24, 2009).Engineering News. ArcelorMittal SA to increase flat steel prices in October (August 31, 2009).Engineering News. ArcelorMittal SA settles excessive pricing case with gold-miners (September 14, 2009).Engineering News. Corporate-level BEE still under consideration at steel giant (June 12, 2009).Engineering News. Court sends excessive pricing ruling back to Competition Tribunal (July 10, 2009).Engineering News. Environmental standards improvement projects under way at Vereeniging plant (July 11, 2008).Engineering News. Green Scorpions found ‘noncompliances’ at ArcelorMittal’s Vereeniging plant (July 19, 2007).Engineering News. Harmony, DRDGold settle steel case with ArcelorMittal SA (September 14, 2009).Engineering News. Highveld Duferco deal clears final competition hurdle (August 22, 2008).Engineering News. Highveld Steel guilty of ‘serious’ environmental noncompliance – Deat (October 4, 2007).Engineering News. Highveld unveils R540m empowerment deal for Mapochs mine (9 April, 2009).Engineering News. Steel giant to spend R150m on cutting Vereeniging’s dust emissions (February 29, 2008).Engineering News. Highveld Steel guilty of serious noncompliance – Deat (October 4, 2007).Engineering News. Steel producer revises production and capex plans as slowdown bites (March 23, 2009).Engineering News. Steel producers may face fine for price fixing – Competition Commission (September 1, 2009).

Highveld Steel & Vanadium annual report, 2007Highveld Steel & vanadium annual report, 2008International Stainless Steel Forum (ISSF). Press release: World economic crisis drives 2008 world stainless production lower (March 12, 2009).Mining Weekly. Kumba set to spend R4bn a year in ongoing iron-ore capex (July 31, 2009).Mining Weekly. Sishen South on course for first production in 2012 – CEO (July 31, 2009).Research Channel Africa. Columbus Stainless cold-rolling mill capacity expansion project, South Africa (July 4, 2008).Reuters. Global iron-ore mine expansion/output plans (January 12, 2009).Steelnews. Quarter 4 of 2008United States Metals Report Q3 2009 World Steel in Figures 2009 www.arcelormittalsa.co.zawww.capegate.co.zawww.cisco.co.zawww.columbus.co.zaeconomywatch.com/business-and-economy/steel-industry.htmlwww.highveldsteel.co.zawww.issb.co.ukwww.saisi.co.zawww.scaw.co.zawww.worldstainless.orgworldsteel.org

South Africa’s Steel Industry 2009The material contained in this report was compiled by the Research Unit of Creamer Media (Pty) Ltd, based in Johannesburg, South Africa. The information contained in this report has been compiled from sources believed to be reliable, but no warranty is made as to the accuracy of such information. This document is designed to be used as a source of information for subscribers to Creamer Media’s Research Channel Online and is not to be reproduced or published for any other purpose. The reports draw on information published in Engineering News and Mining Weekly as well as from a range of other sources, and should provide an invaluable, and easy-to-read snapshot of key industrial sectors.

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