ArcelorMittal South Africa has announced a ZAR 52 million headline loss for the year ended December 31st 2011, which compares to headline earnings of ZAR 1.4 billion for the year ended December 31st 2010. EBITDA halved from the year before to ZAR 1.7 billion.

For the fourth quarter of 2011, there was an improved headline loss of ZAR 260 million when compared with the ZAR 460 million loss reported in the preceding quarter and the ZAR 497 million loss for the corresponding quarter of 2010.

Overall operating costs were severely affected by significant price escalations for raw materials and electricity, which started in 2010 and continued into 2011. In addition, a major structural failure of the blast furnace dust catcher at Newcastle negatively impacted production, while several other stoppages such as the planned repair to the corex tap hole at Saldanha, as well as chilled hearth conditions, experienced at both Newcastle and Vanderbijlpark, also had an effect.

Ms Nonkululeko Nyembezi Heita CEO of ArcelorMittal SA said that "The operating environment showed a marked deterioration in the second half, negatively affected by European debt related concerns in the macro environment and continued weakness in the key steel consuming sectors of construction, mining and manufacturing. Operational problems had a big impact, in particular the four month outage due to the dust catcher collapse in Newcastle. We had to contend with unrelenting pressure on operating margins as production costs climbed 19%, while steel prices only rose 12% on average."

Commercial coke sales and prices were flat YoY. Production costs rose 8% resulting in a decrease in EBITDA to ZAR 870 million from ZAR 1.03 billion in 2010.

The company's safety performance in 2011 was unacceptable with five fatalities. On the other hand, the lost time injury frequency rate averaged 1.24 for the year, which is a 24% improvement on the previous year and a record for the company.

Ms Nyembezi Heita said that "The tragic loss of five colleagues during the year has been devastating. We have embarked on a drive to re emphasize and entrench compliance with the group's fatality prevention standards and safe working behavior, which are central to our goal to eliminate fatalities and injuries from the workplace."

Outlook for quarter one 2012
Earnings for the first quarter are expected to improve significantly due to improved production stability and higher sales volumes, offset to some degree by lower international steel prices.