Bloomberg News

ArcelorMittal S. Africa Sales to Drop on Plant Fire, Avior Says

February 13, 2013

ArcelorMittal South Africa Ltd., the continent’s biggest steelmaker, will report lower sales after a fire at its largest mill halted output, Avior Research (Pty) Ltd. said. BNP Paribas Cadiz Securities cut its rating.

The fire broke out at the Vanderbijlpark operation, which is also Africa’s largest steel mill, on Feb. 9, causing extensive damage and prompting the company to issue notices of force majeure to customers, ArcelorMittal South Africa, known as AMSA, said in a Feb. 11 statement. Avior reduced its forecast for AMSA’s flat-steel sales by 22 percent to 2.5 million metric tons for 2013. The company was downgraded to hold from buy yesterday by Brian Morgan, a Johannesburg-based equity analyst, who set a 12-month price estimate of 31 rand a share.

“Only the steel-making plant was affected by the fire, so all other plants or operations are operating at the moment,” Themba Hlengani, a company spokesman, said in an e-mail response to questions. “No other updates at this stage.”

Vanderbijlpark represents about 60 percent of the company’s total liquid-steel capacity and the fire will result in reduced steel sales, Sean Ungerer, an analyst for Avior, said in a note to clients today.

The plant includes iron-making, foundry and engineering operations.

The stock has declined 9.5 percent this week and closed at 32.14 rand in Johannesburg today.

Electrical arc furnaces shut last year remain down, Julian Gwillim, a spokesman for the company, said yesterday.

AMSA is contacting other ArcelorMittal plants for supplies to mitigate contractual obligations, it said Feb. 9.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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