LETTER: ArcelorMittal responds to Newcastle editorial

Your editorial opinion refers (“ArcelorMittal’s Newcastle nightmare”, January 7).

ArcelorMittal SA appreciates your journalists’ coverage of the company’s unfortunate decision to wind down its long steel business, as announced on January 6.

However, your editorial opinion, published the following day, contained inaccuracies, misleading information and conveyed a misguided perspective on the company.

The subheading of the editorial asserted that the company is “demanding tariffs to shield it from competitors”. This is factually incorrect. The company has motivated its case responsibly to the relevant authorities in an effort to create a level playing field.

With regard to the company’s application to the International Trade Administration Commission (Itac), our approach is a response to the flood of cheap steel imports, and is consistent with measures adopted by numerous other countries across the world in response to the same threat.

As the World Trade Organisation attests, there is nothing competitive about dumping artificially cheap products on the shores of another country. It would be irresponsible for the company and Itac not to respond to these threats.

Your editorial asserts that ArcelorMittal SA is crumbling into “an economic black hole” due in part to “self-inflicted wounds”. To the contrary, the company is a vital component of SA industry and the economy more broadly. Its products are world class and are used by world-class companies along the entire local value chain. The unfortunate decision to close the long steel business is in part intended to ensure the continuation of its highly productive and world-class flat steel business.

Far from suffering from “self-inflicted wounds”, as your editorial opines, the company is on public record as having worked tirelessly to find solutions to ensure the sustainability of its long steel business. These efforts have been acknowledged by stakeholders ranging from government and unions to customers and suppliers.

Your editorial drew a parallel between the circumstances in which ArcelorMittal SA finds itself and “the Russian steelmaker of the same name”. There is no Russian steelmaker of the same name, and it is obvious that the SA and Russian economies and manufacturing environment bear no comparison. Thus, it is perplexing as to why your editorial makes such a basic factual and conceptual error.

Your editorial goes on to claim, without any basis in fact, that the legitimate and reasonable tariffs sought by ArcelorMittal SA against cheap steel imports would be at the expense of smaller mills and their 5,000 employees and “the broader economy”. This claim is simply false.

What is demonstrable is that the winding down of the ArcelorMittal SA long steel business could affect about 80,000 jobs across its long value chain, and that the communities of Newcastle and Vereeniging in particular will be negatively affected.

Remarkably, your editorial commends the government for “seeing through the smoke screen”, while failing to clear the fog of its own argument in pointing the finger of blame back to the company for its “bloated cost structure”. It is here that the editorial’s major contradiction is most apparent.

It is exactly the unsustainable nature of the company’s long steel cost structure, derived of high energy, logistics, labour and raw material costs, compounded by weak demand and cheap imports, that have forced the company to take this unfortunate decision. 

The editorial sees a solution to the company’s challenges in “finding sources of cheap inputs”. This evinces a remarkable naivete and profound ignorance of the costs of primary steel production in SA, and ignores completely the extensive cost-cutting measures implemented by the company in an effort to sustain the long steel business.

Thank you for the opportunity to reply to your editorial. ArcelorMittal SA commits to continue playing a vital role in the SA economy.

Tami Didiza
ArcelorMittal SA

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