ArcelorMittal SA back in the black, thanks to steel prices and costs

ArcelorMittal SA (Amsa), SA’s biggest steel producer returned to profitability in the year ended December after racking up losses for most of the past decade, boosted by higher global steel prices that soared as supply chain snarl-ups cut supplies.

Also boosting the bottom line was a strict focus on input costs, which rose just 10%. CEO Kobus Verster said this was achieved by diversifying its supplies of iron ore and coking coal, which together with scrap metal account for 43% of Amsa’s cash cost per tonne of steel produced.

Amsa has secured contracts with mid-tier iron ore producers, moving away from its traditional supplier, Kumba Iron Ore.

Headline earnings per share, the main profit measure in SA that strips out exceptional times, was R6.15, rebounding from a headline loss per share of R1.85 the year before, the company said in a results statement on Thursday.

Revenue surged 61% to R39.7bn due to a 13% rise in total steel sales volumes and a 47% rise in net realised steel sales prices.

The company is confident about the year ahead, noting that the global economy continues to open up as the Covid-19 pandemic subsides, which will which boost demand for steel in sectors such as automobiles, construction and infrastructure.