ArcelorMittal SA, an Indian multinational steel manufacturing corporation headquartered in Luxembourg, which reported a full-year profit for the first time in eight years, has applied for lower electricity tariffs for its operations in South Africa.
The CEO of ArcelorMittal, Kobus Verster revealed that regulated prices, which include electricity and rail costs, accounted for 18 percent of the company’s total costs. He said a favourable electricity pricing model will boost the company’s cost-saving initiative.
The company, which is Africa’s largest steel producer plans to cut its costs by $50 per tonne by 2021. Verster noted that the company was on course to achieve the target. He said “we are monitoring these things on a weekly basis”.
ArcelorMittal’s applications to the National Energy Regulator of South Africa (Nersa) for a special price dispensation normally lasts for two years. However, the request comes in the midst of stiff opposition to Eskom’s application for a tariff hike of more than 15 percent a year over the next three years, a move opposed by several organisations and companies.
Verster, who spoke after the release for the company’s financial results for the year to December, said ArcelorMittal, whose sites include Vanderbijlpark, Saldanha, Vereeniging and Newcastle, wanted electricity tariffs that would enable it to be competitive.
According to Verster, “we need to have an equal footing versus our competitors”. He said the electricity prices in South Africa were approximately 30 percent higher than the international benchmark.
The CEO said the company submitted different applications for its various sites as the economic drivers and conditions for the operations were different. He expects the applications to be finalised in three to four months.