Robert Laing

Robert Laing

Global steel giant ArcelorMittal's South African operations squeezed 26percent higher profit out of three percent less metal during the March quarter compared to the December quarter.

Eskom's power outages during the first three months saw total steel production slip to 1,56million tons from 1,61million tons the previous quarter.

ArcelorMittal estimated unreliable electricity supply lost it 96000 tons production during the March quarter and it will lose another 58000 tons this quarter.

This year's total production loss due to Eskom's problems is forecast at 300000 tons.

Chief executive Nonkululeko Nyembezi-Heita said two 130 MegaWatt cogeneration plants were under construction at the group's steel mills, which should be completed by 2011.

The dominant steel supplier's price hikes saw its revenue grow 12percent to R8billion while its operating profit grew even faster by 26percent to R2billion.

ArcelorMittal is appealing the competition authorities' finding that it profiteers in the flat steel market, and now faces claims that it abuses its market dominance in the long steel market.

Despite gripes from local steel consumers over its constant price hikes and a slowing economy, ArcelorMittal's domestic sales grew 14percent to 1,2million tons during the first quarter.

To meet rising domestic demand on lower production, exports were cut by 47percent to 208000 tons.

Asked if a 25percent operating margin was not excessive, Nyembezi-Heita replied that steel mills had to make sufficient profit during steel price peaks to cover the troughs.