Africa’s largest steel maker, ArcelorMittal South Africa, has asked the government to impose a 10 per cent import duty on steel and in return it may offer shares to black empowerment partners, a newspaper reported on Sunday.
Shares in the unit of the world’s largest producer of steel are trading around their lowest levels in more than a decade and the company has said South Africa’s high labour costs, poor rail infrastructure and slowing economy have forced it to consider cutting back operations and jobs.
The Sunday Times newspaper reported that steel baron Lakshmi Mittal was in South Africa in June, where he briefed President Jacob Zuma’s government on the challenges in the steel industry and asked for intervention to counter cheap Chinese imports.
“Rome is burning, every single day the industry loses millions and it is really, really concerning,” Paul O’Flaherty, the CEO of ArcelorMittal South Africa told the newspaper.
He said the local economy “is dead, there is just no infrastructure spend”.
According to Thomson Reuters data, shares in the company have dropped over 60 percent in the last 12-months and 54.8 percent so far this year.
ArcelorMittal South Africa has not made a profit in the past five years and in exchange for protection from steel imports, the newspaper reported that Mittal would be prepared to offer shares to black South African consortiums.
“We are at a stage where the major shareholder understands that we need an ownership deal and we are putting plans in place to do one. However you need an industry that you can invest in,” O’Flaherty said.
ArcelorMittal is expected to decide by the end of July on the future of its Vandebijlpark operations, outside Johannesburg, its biggest loss-maker, which employs 4,500 workers.
The company and government spokesmen could not be reached for comment.