ishrat.sharma: Mittal shuts Vanderbijl electric-arc furnace

Instead of completing the R230-million dust-extraction system at its Vanderbijlpark plant to abate fugitive emissions that escaped from electric-arc furnaces, steel producer ArcelorMittal South Africa (Mittal) had taken the decision to close its furnaces indefinitely, CEO Nonkululeko Nyembezi-Heita said Wednesday.

The plant's three electric arc furnaces were shut on October 16, reducing Vanderbijlpark?s 4.7-million-ton-a-year production capacity by 500 000 t/y.

Nyembezi-Heita said the electrical furnace was the fourth unit cited in the Gauteng Department of Agriculture and Rural Development compliance notice issued in October, which alleged that various units at the Vanderbijlpark works did not comply with certain conditions stated in its atmospheric emission licence.

Other units cited were the coke battery, baghouse and sinter plant.

?We had a deadline of October 16 by which to comply, but given the cost of doing so, as well much weaker consumption environment, we decided to rather shut the unit,? she said in a conference call.

Mittal had lodged an application to suspend the compliance notice where after an appeal process would follow.

?We are complying with the conditions in our licence that were allegedly breached and are therefore contesting the compliance notice. We remain fully committed to maintaining and improving our environmental performance and the recent completion of various improvement projects bears testimony to this,? Nyembezi-Heita commented.

In efforts to abide by set emissions standards, the company also recently completed the R250-million emission abatement system for the sinter plant at Vanderbijlpark works, which would reduce particulate emissions from this facility by 80%.

Nyembezi-Heita said Mittal experienced commissioning problems with the abatement equipment at the sinter plant, which had led it also being cited in the notice.

?By the time that the compliance notice was issued, we had ironed out all the commissioning problems and the abatement equipment was operating to design specifications,? she pointed out.

Commenting on the coke battery at the Vanderbijlpark plant, which was also at fault, COO Hans-Ludwig Rosenstock said the company was looking at upgrading it in 2013.

He added that the plant?s Blast furnace 3, which was shut down on Tuesday for repairs, would be restarted before Christmas.

STEEL SALES DOWN, LOSS NARROWS

Meanwhile, the company managed to narrow its headline loss for the quarter under review to R168-million from R177-million in the previous quarter, as the negative impact of the challenging global and local steel market was somewhat offset by a softening in some raw material prices.

This was especially evident in coking coal, pellets and scrap, with commercial coking coal sales rising 24% owing to ferrochrome operators restarting furnaces following the end of State-owned Eskom?s electricity buy-back period in which Mittal participated.

The quarter?s loss marked a significant improvement on the loss of R460-million recorded during the corresponding period in 2011.

Similarly, Mittal?s net loss also improved to R148-million for the quarter from R177-million in the June quarter.

The company?s earnings before interest, taxes, depreciation and amortisation increased to R238-million, marginally up from R224-million in the previous quarter, while showing a recovery from the R3-million reported during the same period in 2011.

However, revenue decreased 12% quarter-on-quarter to R7.6-billion, as total steel shipments declined 12%. Domestic and export shipments fell 5% and 27%, respectively, with flat and long steel products posting declines of 12%.

Liquid steel production increased by 140 000 t, resulting in capacity utilisation for flat steel rising to 67%, compared with last year?s 64%, and for long steel, 63% compared with 46% a year earlier.

With the exception of the Newcastle plant, production levels were stable at all operating units. The KwaZulu-Natal operation experienced a longer-than-anticipated restart of the blast furnace following a scheduled stop to repair a taphole.

?One big issue in our lives is the immanent reline of the blast furnace at Newcastle, it is coming close the end of its life we do pick up additional difficulties keeping that alive. This remains a source of concern into 2013, but mid-2014 remains the time of reline,? Nyembezi-Heita indicated.

Total steel sales were 152 000 t lower quarter-on-quarter at 1.1-million tons, with the domestic component declining by 42 000 t to 802 000 t, while exports were 110 000 t higher at 295 000 t.

Further, rand-denominated net realised prices were higher compared to 2011, but were offset by lower dispatches.

?We have had higher operational stability across the group in the first nine months of the year, compared to almost any other period over the last four-and-a-half years,? Nyembezi-Heita noted.

Looking ahead, she said seasonal slowdown in domestic demand during the December month, aggravated by production losses following an extended taphole repair of the blast furnace at Newcastle, fuelled expectations that the fourth-quarter earnings loss would be substantially more than the third quarter?s loss.

However, she maintained a bullish medium-outlook, saying lower prices for some raw materials, as well as the recent weakening of the rand/US dollar exchange rate would partially offset the negative impact on earnings.

Edited by: Mariaan Webb

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