bold spirit - ArcelorMittal South Africa

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ArcelorMittal South Africa
Annual Report 2010
Operational review continued
Long steel products are produced at our Newcastle and
Vereeniging operations and are used extensively in the
infrastructure industry, comprising products such as rebar,
rod and wire rod.
The net operating income increased
from R315 million to R826 due to
higher sales volumes and prices.
Costs were negatively affected by
higher iron ore and local coal prices,
which were also partially offset
by lower import coking coal prices
as also applicable in the flat steel
business.
Production declined by 1% against
2009, of which the cold conditions
experienced on Blast Furnace N5
during December was the main
contributor.
Capital expenditure
Newcastle Works
Newcastle Works operated at 82%
of capacity in 2010 compared with
87% in 2009. Cold blast furnace
conditions affected output in
December after very stable operating
conditions during the year. Coal and
iron ore supply from Transnet Freight
Rail was once again erratic due to
industrial action and performance
issues. Supply had to be supplemented
with more expensive road freight
deliveries .The downstream units
continued their good performance
from the previous year and improved
production levels.
Year ended
31 December
2010
Rm
2009
Rm
Value-adding 67 18
Replacements 270 105
Environmental 120 148
Total 457 271
Vereeniging Works
Vereeniging Works operated at
73% of capacity compared with
55% in 2009. With Newcastle Works
being the lower-cost producer, output
at Vereeniging Works was cut back as
far as possible to maximise low-cost
production. Newcastle Works also
supplied Vereeniging Works with some
of the requirements for its rolling mills.
Capital expenditure
Total capital expenditure increased
from R271 to R457 million during
2010. The bulk of the funds spent
on capital projects went towards
replacement projects (R270 million)
and environmental capital
(R120 million), while new valueadding
capital investments were
R67 million.