The share price of ArcelorMittal South Africa Ltd, the arm here of the world’s largest steel producer, was pounded into a 12-month low on the Johannesburg Stock Exchange after the company said its Newcastle blast furnace, situated in KwaZulu-Natal, had failed and would take at least two months to repair.
The Newcastle facility, rated as one of the lowest billet cash-cost producers in the world, is a key supplier to the local mining, construction, automotive and engineering sectors. It is the second time this year that ArcelorMittal SA has suffered a setback due to non-operation of the blast furnace at Newcastle. The plant is one of the four major production facilities of the company, which produces 1.6 million tonnes of steel per year.
Production would carry on with available stock till the third week of this month but not beyond. A company statement said structural failure at the gas-cleaning plant was caused when a dust extractor collapsed onto a blast furnace. Repairs could take up to two months, with another two weeks for re-commissioning.
The shares have lost a quarter of their value since the beginning of July. That means ArcelorMittal has lost 12 billion rand ($1.7 billion) in market value since May.
Sentiment for the share has also not been helped by brittle operational performance in the half-year to end-June, when profit from operations was more than halved to R929 million ($130 million) as operations struggled with sharp increases in raw material prices.
