bold spirit - ArcelorMittal South Africa

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24 ArcelorMittal South Africa Annual Report 2010 The role of steel in our economy Critical infrastructure Our steel is used in various projects for our critical infrastructure in South Africa. These include:: Transport systems – road, airport and rail systems. Electricity transmission and distribution systems – power stations and grid. Telecommunications networks – signal transmission stations. Water supply and treatment – dams, pipes and purification plants. Fuel supply systems – piping for liquid, gas and solid fuel transportation. The public sector’s infrastructure programme will use an estimated 2.5 million tonnes of steel between 2007 and 2015 in these sectors. The list is dominated by Eskom’s Medupi and Kusile power stations, followed by the country’s rail network and dam building projects. We believe that most transport-related infrastructure problems will be addressed by 2014 but there will be some demand from Eskom, whose projects are scheduled to run through to 2020. Furthermore, the Department of Water Affairs has announced that its dam building programme will run through to 2015. Government, through the budget speech of 2011, has announced capital spending of R487.4 billion in the next four years, with Eskom taking the largest allocation of 68.7% (R334.8 billion). Construction activities, especially large infrastructure developments within the public sector, mining, and manufacturing sectors, has been the key driver of growth in gross fixed investment in the South African economy. Steel is the mainstay of these sectors and hence the steel industry contributes directly to the country’s gross domestic product (GDP), tax revenues and foreign exchange earnings. Steel is also the key raw material for the manufacturing and metal fabrication sectors and thus a vital ingredient in many downstream consumer industries such as transport, aviation, housing and packaging. Very few modern constructions do not contain steel as part of their design. Steel is being increasingly viewed as a building material of choice with significant advantages in terms of speed of construction, safety, cost and aesthetic appeal. However, the threat of the industry not achieving its full growth potential remains in the strong rand, development of strong metal alloys and synthetic plastics, which are replacing or being used as substitutes for steel in some sub-sectors of the manufacturing sectors such as vehicles and packaging. Considering that almost 80% of our South African steel output is used in the manufacturing and construction sectors, such developments need to be closely monitored.
25 ArcelorMittal South Africa Annual Report 2010 The other development in Steel is a key resource in the development of the South the industry is the unique African economy as its feeds into the gross domestic fixed feature that steel poses, that investment through infrastructure development, which is is a recycled product. Due to critical to a balanced and sustainable economic growth. its magnetic properties, steel packaging can be readily and cost-effectively recovered from the domestic waste stream. Unlike other materials, steel’s properties do not deteriorate when it is re-melted. For this reason, every steel plant is a recycling plant and the product always contains recycled steel. Used steel cans are recycled into part of a guard rail, which may one day be recycled into an appliance. Across the world 435 million tonnes of steel products, including used steel cans, appliances, automobiles and construction materials are recycled every year as part of the steel making process. This equates to a worldwide recycling rate of over 50%. As a group ArcelorMittal is the biggest recycler of scrap steel in the world, and the group works with local and national governments to promote it further. Every year more than 25 million tonnes of products are recovered and recycled, which also saves around 35 million tonnes of CO 2 . The steel industry is a major employer for South Africans and according to the South African Iron and Steel Institute (SAISI), directly employs more than 33 000 employees. We account for over 71% of the country’s output and are the market leader in Africa’s steel industry. The company constitutes about 1.3% of South Africa’s GDP and has a favourable impact on the country’s balance of payment as the cost and quality of the company’s steel limits the need to import the product. South Africa is the 21 st largest producer in the world and manufactures about half of Africa’s crude steel. According to our latest calculations, primary steel producers in the country have the capacity to produce over 8 million tonnes of finished steel products per year. According to SAISI almost 4.8 million tonnes was sold domestically in 2010. The steel sector also plays a critical role in skills development. The steel manufacturing process requires a broad set of skills and a continuous programme of upskilling of employees. Maintaining a healthy skills pipeline through training and bursaries is an imperative for companies in the sector. Skills that are being developed by the industry range from project managers and engineers to technicians and artisans. Such training programmes contribute to the broader industrial skills base of the country at a time when the economy is short of skills despite the impact of the financial crisis. At the end of last year we alone had over 3 000 people in our skills development pipeline.
Page 1 and 2: Annual Report 2010 bold spirit
Page 3 and 4: I in brief
Page 5 and 6: Brand values Our goal is to provide
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bold spirit - ArcelorMittal South Africa

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