ArcelorMittal may close Saldanha plant

Johannesburg, South Africa — MININGREVIEW.COM — 16 July 2010  – ArcelorMittal South Africa Limited “’ a unit of the world’s largest steelmaker “’ says it will close its Saldanha plant and cut all steel exports, after failing to reach an interim iron ore supply agreement with Kumba Iron Ore Limited.

“The plans will affect 4 000 jobs in South Africa’s steel industry and seriously impact industries that depend on it,”  the steelmaker said in a statement issued here. ArcelorMittal South Africa supplies about 70% of the country’s steel requirements.

Kumba “’ which provides ArcelorMittal South Africa with two- thirds of its ore needs “’ cancelled a nine-year-old supply agreement from March 1 under which the steelmaker bought ore at 3% above production costs.

Instead, Kumba proposed two options to the steelmaker: that it pay the difference between the old agreement and the market price into an escrow account until the dispute is resolved; or that it pays US$50 a metric tonne for ore supplied to its coastal Saldanha plant and US$80 a tonne for its inland plants, the miner said in a separate statement.

The dispute is currently in arbitration.

ArcelorMittal South Africa produced 8 million metric tonnes of steel in 2009, and Saldanha produces 1.2 million tonnes a year, according to the company’s website.