bold spirit - ArcelorMittal South Africa

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42 ArcelorMittal South Africa Annual Report 2010 Operational review continued Flat steel products are used in consumer-facing industries such as automotive, packaging, building and construction as well as welded pipes and tubes. Flat steel products are produced at our operations in Vanderbijlpark and Saldanha. coal prices due to the late completion of contractual coking coal commitments at pre-crisis pricing levels in 2009. Vanderbijlpark Works Blast Furnace C was stopped in the middle of November to manage the slowdown in steel demand and was subsequently restarted during December following the cold conditions experienced by Blast Furnace D. Blast Furnace D was operating normally by the end of December. The Electric Arc Furnaces were used to balance supply and demand during the year, although low levels of demand meant that they never operated at full capacity. Vanderbijlpark Works now has a total of six direct reduction iron ore (DRI) kilns, each of which can produce around 500 tonnes per day although fluctuating demand levels meant that not all kilns operated at full capacity during the year. The two new DRI kilns commissioned during quarter three of 2009 were briefly stopped in July for design modifications which improved their performance. These modifications allowed for the powergenerating plant to operate at a consistently acceptable level. In order to continue the focus on continuous cost improvements, a formal process called Business Improvement was launched, drawing on methodologies already well established within ArcelorMittal Group. Quality performance remains a key focus with the launching of breakthrough projects towards the end of the year with significant improvements expected in 2011. Saldanha Works During May, the supporting structures around one of the DRI stock holding Capital expenditure bins collapsed causing the bin to fall. Although there were no injuries, the incident severely affected the plant’s ability to operate, and capacity utilisation was limited to around 80% until end September. During October the reduction shaft of the Corex plant was stopped for 21 days to repair the bustle refractory after it failed prematurely. Further improvements at the hot strip mill resulted in a significant increase in the percentage of ultra-thin hotrolled coil product being produced, further strengthening our position as a world leader in the production of ultra-thin hot-rolled coil. Year ended 31 December 2010 Rm 2009 Rm Value-adding 284 107 Replacements 687 423 Environmental 176 100 Total 1 147 630
43 ArcelorMittal South Africa Annual Report 2010 Capital expenditure Capital expenditure increased to R1 147 million in 2010 from R630 million in 2009. The majority of the funds (R687 million) were allocated to replacement capital, while R284 million was spent on valueadding capital and R176 million on environmental projects. The sinter off-gas project at Vanderbijlpark Works will be commissioned during quarter one of 2011 at a total cost of R247 million, of which R93 million was spent in 2010. Other expenditure includes the installation of a coke cutter in Vanderbijlpark Works to optimise fuel rate consumption. Operational results Year ended 31 December 2010 Rm 2009 Rm Revenue (Rm) 19 434 16 292 EBITDA (Rm) 1 442 381 Net operating income (Rm) 347 (614) Liquid steel production (’000 t) 3 814 3 428 Sales volumes (’000 t) 3 348 2 336 – Domestic 1 012 2 858 – Export 2 079 779 Domestic sales (%) 67 73 Capital expenditure (Rm) 1 146 630 Hot rolled coil export price (USD/t C&F) 703 508 Number of employees 4 926 5 123 Total HRC production cash cost (Rand per tonne) 4 045 4 070 Total HRC production cash cost (USD per tonne) 551 482
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Annual Report 2010 bold spirit
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