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ACL - Conclusion of the 1st phase of the Strategic Asset Footprint Review & further information on the S189 process
ArcelorMittal South Africa Limited Incorporated in
the Republic of South Africa) Registration Number
1989/002164/06)
Share Code: ACL
ISIN: ZAE000134961
(“ArcelorMittal South Africa” or “the Company”)
CONCLUSON OF THE FIRST PHASE OF THE STRATEGIC ASSET FOOTPRINT
REVIEW AND FURTHER INFORMATION ON THE COMPANY’S SECTION 189
PROCESS
On 25 September 2019, shareholders were advised that the Board of ArcelorMittal
South Africa had extended its planned strategic evaluation process to incorporate a
review of the operational and financial sustainability of certain of its major operating
sites, individual plants and production areas (“Strategic Asset Footprint Review”).
In terms of the commitment to undertake the Strategic Asset Footprint Review in a
responsible, well-considered yet expeditious manner, and ensuring shareholders are
appraised of the outcomes of the process, the Board now advises shareholders that
the first phase of the review has been completed.
Following due deliberation and consideration, the decision has been made to
undertake an orderly and commercial wind-down of steel operations at Saldanha
Works (“Saldanha”), ultimately placing the operation on care and maintenance.
Saldanha, which has lost its structural competitive cost advantage to effectively
compete in the export market, mainly due to raw material and regulated prices, is
suffering severe financial losses and these are forecast to continue for the
foreseeable future. The process of winding down Saldanha’s steel operations to a
state of care and maintenance will begin immediately and is anticipated to be
completed during the first quarter of 2020.
This difficult decision was taken in the context of constructive ongoing engagements
with key stakeholders, including government and organised labour, to find alternative
solutions to the dire situation in the South African steel industry.
Realising the importance of Saldanha to the region, and as far as reasonably possible,
the Company will make every effort to minimise the impact of the orderly and
commercial wind-down.
Contractual domestic sales orders from Saldanha will now be fulfilled from the
Vanderbijlpark Works.
Progress is being made with the next phase of the Strategic Asset Footprint Review
focusing on the Newcastle operations and certain of the long steel products rolling
facilities with the objective of sustainably improving their structural cost position and
service offering. Exploration of the benefits of a concentrated operating footprint will be
of foundational importance during this phase of the review.
Shareholders will be kept appraised of further outcomes of the Strategic Asset
Footprint Review.
Further, on 10 July 2019 it was announced that the Company was consulting with its
employees through a process provided for in Section 189(3) of the Labour Relations Act
in relation to the anticipated large-scale restructuring needed to strengthen the long-
term sustainability of the Company. The Company has now concluded the CCMA-
facilitated consultation process.
The required steps will now be taken to implement the outcomes of the Section 189
process and ensure the Company strengthens the sustainability of the business in the
longer term.
By order of the Board
11 November 2019
For further information please contact:
Vuyo Mtawa: Manager: Corporate Communications
Tel: (016) 889 4100
Sponsor:
Absa Bank Limited (acting through its Corporate and Investment Banking division)
Date: 11/11/2019 09:34:00
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