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This follows ArcelorMittal South Africa (AMSA) having to close one of its furnaces for three weeks due to Transnet’s performance.
AMSA states, “The company can confirm that Blast Furnace D at the company’s Vanderbijlpark Works has been temporarily stopped due to low stock levels of the raw materials required for steelmaking. This is a direct result of the progressive deterioration in the availability of locomotives, as well as poor rail service delivery.”
It must be noted that AMSA requires massive quantities of iron ore, coking coal, and other raw materials as key inputs in the steelmaking process. Traditionally, these products were delivered by rail, which AMSA’s facilities have been designed around.
Following operational and security issues faced by Transnet Freight Rail, the AMSA states it now relies predominantly on trucks deliveries for supply.
Furthermore, AMSA holds three blast furnaces, two in Vanderbijlpark to produce flat steel products and one in Newcastle to produce long products.
Newcastle Works’ blast furnace is also scheduled for a mini-reline, which will begin mid-April and continue into June.
In February, AMSA CEO Kobus Verster explained that the company would also be shutting down furnaces at Newcastle Works to preserve stock. At the time, he emphasised that this would not have a long-term impact on the local steelworks.
Instead, the furnaces would be shut down for 16 hours per week to increase efforts to replenish stocks and create a maximum buffer in terms of inventory.
Adding to the Vanderbijlpark blast furnace developments, AMSA has alerted customers of a price increase in long steel products due to the impact of the Russia-Ukraine conflict on commodities.
In a letter to its customers, AMSA explained that Ukraine and Russia were significant global suppliers of various steel input raw materials and other steel products. The recent developments have resulted in all commodities seeing a sharp rise in price.
“However, the company has decided not to implement a price increase on flat steel products for now,” AMSA stated.
These two curveballs come a month after ArcelorMittal expressed that the fiscal year ended 31 December 2021 was its best in 15 years.
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