This is a substantial improvement on the 168 million rand headline loss reported a year earlier and 35 per cent higher than the preceding three months.
“Within the context of still fairly weak domestic trading conditions, our financial performance was encouraging. I’m pleased with the stability in our operations this past quarter, during which we’ve also been able to operate at relatively high levels of capacity utilisation, which were above 80 per cent across all the units,” said [DATA ACL:ArcelorMittal] South Africa’s chief executive officer Nonkululeko Nyembezi-Heita.
Earnings before interest, tax, depreciation and amortisation for the last quarter was 581 million rand, which is 343 million rand higher than the same time last year.
However, this was 227 million rand lower than the previous quarter as higher operating costs and an unfavourable regional sales mix affected earnings.
The results include a net positive impact from an insurance claim of 179 million rand for the fire at the Vanderbijlpark facility earlier in the year.
Net cash declined to 575 million rand from the 1.1 billion rand achieved in the preceding quarter, along with the normalisation of the working capital after the fire.
Plant operations were stable with liquid steel production of 1.3 million tonnes, 41,000 tonnes higher than the prior year’s corresponding period. This was however 92,000 tonnes lower than the previous quarter following the closure of the electric arc furnaces at Vanderbijlpark.
Capacity utilisation increased from 81 per cent in the preceding three months to 83 per cent.
Steel sales rose three per cent year-on-year to 1.13 million tonnes and nine per cent quarter-on-quarter.
Commercial coke sales were up 40 per cent from a year ago to 154,000 tonnes as the ferrochrome industry resumed normal operations at the end of the electricity buyback programme in June. Quarter-on-quarter coke sales rose 23 per cent.
A new iron ore supply agreement was concluded with Kumba that effectively supersedes both the 2001 Sishen iron ore supply agreement and the 2001 Thabazimbi iron ore supply agreement. The agreement secures the supply of 6.25mt of iron ore per annum at competitive prices for ArcelorMittal South Africa.
It will provide significant cost benefits relative to the interim supply arrangement in place since March 2010 and the excessive costs at Thabazimbi.
This price is subject to a ceiling equal to the Sishen export parity price at the mine gate. The new agreement will also resolve all our outstanding disputes with Kumba and will take effect from 1 January 2014 until the end of life of Sishen mine, conservatively estimated at 18 years.
Under the present agreement, Thabazimbi mine operates as a captive mine with the costs borne by ArcelorMittal South Africa. Under the new terms, the operational and financial risks will pass to Kumba.
The new supply agreement, which remains subject to various conditions, potentially secures a longer-term future for the Thabazimbi mine as Kumba will assess the technical viability of extending the life of the existing mine, by deploying new technology to recover and process low grade material into saleable product. If successful, this will result in the retention of some 1,300 jobs at the mine.
“This is a very positive development for ArcelorMittal South Africa and Kumba. The scope of the new agreement is broad, incorporating iron ore supply from both Sishen and Thabazimbi. The importance of the new arrangement for us is that it resolves all on-going disputes with Kumba, results in more favourable prices than we currently enjoy and provides long-term security of supply for a key raw material input,” said Nyembezi-Heita.