Steel producer ArcelorMittal South Africa said on Wednesday that it has specific key initiatives in place which it believes will have a reasonable prospect of returning the company to profitability.

It says that discussions with government are “advanced and ongoing” regarding the government’s consideration of the designation of local steel for state procurement and government infrastructure spend designation. ArcelorMittal South Africa is also in discussion with the government on a pricing mechanism for its steel.

The company says that without the requisite tariffs as applied for above and without the initiatives committed by government regarding the use of local steel for government infrastructure projects, the steel industry and itself as a company will need to undertake significant structural change.

Meanwhile, a rights offer, which is expected to yield R1.3 billion by about 25 January, after partially settling the ArcelorMittal Group loans from the proceeds, also forms part of the company’s continued efforts in cost reduction.

The company’s BEE ownership transaction is also well on track with net cash (still being priced) expected to be raised by July 2016.

Further options for additional funding are also being explored as previously communicated, the company said in a statement.

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