ArcelorMittal South Africa (Amsa) could head into a downward spiral if an electricity tariff hike of around 20% is accepted, but the Saldanha plant will not close overnight.
This, according to general manager of the plant Richard Holcraft.
He was speaking at the last West Coast Business Chamber event for the year in reaction to the recent comments from Amsa CEO, Wim de Klerk during the public comment process of the National Energy Regulator (Nersa).
Eksom is proposing a 19,9% hike to electricity tariff.
The Saldanha plant has an electricity bill of R1,3 billion, which means a 20% price hike would be disastrous for operations, said Holcraft. He added that with the already high price of electricity, the ongoing drought, transport expenses and the international steel prices all lead to a difficult climate to work within.
“The implications of a 19,9% increase are that it could exacerbate investment losses and loss of jobs,” says Holcroft.
The local works employ around 880 workers, while the secondary jobs dependent on the plant employ more than 2 000.
In recent years, Saldanha Works has had to reduce the number of contracts “for the greater good of the company”.
“Our big thing is we need an alternative approach,” says Holcroft,
“We can’t pass (the price hike) onto our customer. Our competition is Japan, India and China, and they set the price — we don’t.”
Practically an alternative approach for Amsa means working together with government.
“We are working hard with government to establish a special framework for tariffs for industry.
“This means having a framework that encourages industry to use the surplus (electricity) capacity at a lower rate, encouraging plants to start up and help economic investment,” Holcraft explained.
Along with plans to address the high costs of electricity, plans are underway for a reverse osmosis plant to ensure Saldanha Works use even less municipal water.
Nersa was said to rule on Eskom’s price hike yesterday (13 December). At the time of going to print no final decision had been made.
