Johannesburg - This week the department of trade and
industry entered the dramatic scene unfolding in France between ArcelorMittal
and the French government.
It requested the South African embassy in France to provide
details of the public spat that grabbed headlines across the globe this week.
Speaking to City Press on Friday, the department’s
director-general, Lionel October, said: “I am trying to get our embassy to get
the details of what is really happening. Right now, we don’t know who is right
or wrong because we don’t have the facts on the table.”
ArcelorMittal, the world’s largest steel maker and South
Africa’s most dominant steel producer, closed the year dramatically – amid a
political and production storm. That saw the French government telling the
company’s chairperson and chief executive, Lakshmi Mittal, to pack his bags and
leave the nation.
The situation led to the Indian-born steel billionaire
Mittal and French President Francois Hollande exchanging harsh words. But a
blistering attack on ArcelorMittal was started by France’s minister for
industry, Arnaud Montebourg.
When ArcelorMittal announced it would close two blast
furnaces in the Florence region, labour unions and the government reacted with
anger by condemning the company.
Montebourg was quick to accuse the company of lying to the
government, and breaking its commitments to the government and employees, in a
nation that is still reeling from unemployment and the social and economic
effects of the eurozone austerity measures.
In South Africa, ArcelorMittal has had a mixed track record
of cooperation and clashes with the government, and authorities such as the
Previously, the South African government and several steel
users mounted a vocal protest to Mittal’s approach to increasing the price of
They complained that ArcelorMittal was hiking prices in
collusion with other steel producers and that it was cutting back on the
rebates it offered to secondary exporters.
After the public furore over the price of steel, the matter
was referred to the Competition Commission.
According to Themba Hlengani, spokesperson for
ArcelorMittal, the matter of steel pricing is, after many years, still bogged
down in what they call “the Competition Commission process”.
Regarding the pricing issue, October said: “The main issue
for us now is to mediate the dispute between Kumba and ArcelorMittal over the
iron ore supply agreement. The minister (Rob Davies) has appointed a mediator
and the mediator has been accepted by both parties.
“Our position was that ArcelorMittal must pass on the
benefits to downstream steel users – mining, construction companies and other
steel users – it was deriving from its iron ore supply agreement with Kumba at
cost plus 3%.”
Kumba is the fourth-largest iron ore producer in the world
and the largest in Africa.
Following the pricing debacle, ArcelorMittal courted
attention yet again when it announced a bold empowerment deal.
Valued at R9bn, the deal boasted a number of high-profile
and politically aligned individuals close to the governing ANC.
The empowerment partners included Duduzane Zuma, the son of
President Jacob Zuma, and former economic adviser to the president, Sandile
Zungu. The deal was widely criticised for being an attempt to buy political
favour and company shareholders voted against it.
The failure of the transaction, mooted by ArcelorMittal SA
after it was rejected by the shareholders, left the company without an
empowerment partner and thus unable to comply with South Africa’s empowerment
Hlengani said his company was still committed to
empowerment. “Empowerment is still an imperative for the company. There are a
number of possible transactions on the table.
“Despite the cancellation of our proposed BBBEE (broad-based
black economic empowerment) transaction in 2011, concluding an equitable BBBEE
transaction remains a priority.
“Our top management and board is committed to concluding a
transaction that will truly benefit our staff members and local communities,
and substantially improve our BEE rating.”
Yet, across the world, ArcelorMittal has been labelled a
breaker of promises as it battles governments from France to India.
This week Hollande turned up the pressure on ArcelorMittal
by demanding that its chief executive guarantee French jobs at the two blast
furnaces that are under threat of closure.
A statement from the French presidency read: “The president
reaffirms his determination to guarantee permanently the employment at the site
and presented different permanent options.”
Mittal had given the French government until yesterday to
find a buyer for the two blast furnaces. The government, however, is of the
view that the entire ArcelorMittal operation in Florence should be up for sale.
Caught between globally plunging demand – a debt of $22bn
(R193bn) – and unhappy governments in South Africa, India and
France, steel baron Mittal this week met Hollande to avert
the expulsion of his company from France.
Mittal continues to lose money as his personal fortune
dropped more than $3bn last year and $10bn in two years as shares of
ArcelorMittal tanked due to surging costs and slumping demand in Europe.
The shares hit a low in August when ratings agency Standard
& Poor’s downgraded the steel maker’s debt rating to junk status.
ArcelorMittal has been selling non-core assets to reduce its