ArcelorMittal SA opens new rod mill in Mozambique
Furthering its reach into Africa, ArcelorMittal South Africa officially opened its 35 000 t/y capacity rod mill in Maputo, Mozambique, which would supply the domestic construction market in the country.
"The investment is part of a wider strategy to grow in Africa. Mozambique will always be special to us as the place where we cut our teeth doing business outside of our country," said ArcelorMittal SA CEO Nonkululeko Nyembezi-Heita in an address to dignitaries, businesspeople, and journalists in Maputo on Saturday.
The "relatively small" mill was one of two mills acquired by ArcelorMittalSA from the Mozambican government in 2006 for $11,4-million. The mill was the first entity the company has established outside of South Africa in 80 years of operation.
"The pricing plan will be the same as in South Africa," stated Nyembezi-Heita, "in other words there will be no subsidising of the local market".
The availability of the mills as well as the location, played a role in the acquisitions, which fell within the company's expansion execution plans. "There are no further acquisition plans that we can talk about," commented Nyembezi-Heita.
The newly opened mill had been standing non-operational for eight years, and refurbishment started in January 2007, at a cost of about R25-million. Commissioning began in February 2008, and the full production capacity expectation of 100 t/d was to be reached over the next two months.
During refurbishment, all programmable logic controls (PLCs) were replaced, the main gearbox was refurbished, the main control box was refurbished, and all components and areas thoroughly cleaned. Owing to the age of much of the equipment, many "teething problems" were still being addressed.
The mill would produce 8 mm, 10 mm, 12 mm, and 14 mm merchant bar, rebar, and steel droppers, which would be produced from billets imported from South Africa's Newcastle works, and the Ukraine.
The refurbished mill would employ 86 Mozambicans (workers who were previously employed by Cifel at the mill) and three South African expatriates. Heading operations at ArcelorMittal Maputo SA, would be plant manager José Marques.
Mozambican Minister of Trade and Industry Antonio Fernando expressed his happiness at the "re-inauguration" of the facility, which would have "other positive consequences in the up- and downstream markets in Mozambique".
In 2007, Mozambique achieved growth levels of 7%, and was considered by the International Finance Corporation as "one of Africa's best reformers", and Fernando stated that the country hoped to further improve conditions for investment.
"It has been a joy for our team to work with the energetic Mozambican government team, and we see this as the start of a long partnership," affirmed Nyembezi-Heita.
"In Mozambique, investors have easy access to the Southern African Development Community, as well as access to the free-markets of the US and Europe. Economic logic prevails, and we hope to see more investment into Mozambique from ArcelorMittal, and we hope that your example is followed by those who may be doubtful," concluded Fernando.
GREENFIELD EXPANSION
ArcelorMittal SA would also soon start laying the foundations of its greenfield project in Mozambique - a new steel plant with a production capacity of 400 000 t/y, where construction would take place over the next 18 months.
The offtake market for the steel products from the greenfield project would be Sub-Saharan Africa, where the company saw the largest growth, and not overseas. The demand from the Mozambican market was estimated at around 50 000 t/y, so some of the steel would be destined for South Africa, but also other East African countries. The strategic location of the new plant, near to the international port of Maputo, meant that steel products could easily be shipped to countries like Kenya and Tanzania, where demand for long steel products was also strong.
Indeed, the proximity to the international harbour meant that "steadily but surely it could start to pick up the slack from congested South African ports", added Nyembezi-Heita.
ArcelorMittal's Newcastle works, which supply the operations in Mozambique were also set for expansion, from about two-million tons a year, to three-million tons a year, expected to be operational by 2012. The expansion would include a new blast furnace, a new power plant, a new mill, and an infrastructure upgrade.
