Arcelormittal South Africa Limited · JSE:ACL
Arcelormittal South Africa — Investor Presentation (June 2012)
49 slides from Arcelormittal South Africa's investor presentation, Jun 4, 2012
Slide 1: ArcelorMittal Newcastle Works
ArcelorMittal Newcastle Works June 2012
Slide 2: Contents
Contents • About Newcastle Works • Newcastle Works • Management Drives • People • Highlights of Newcastle Works 1
Slide 3: About Newcastle Works
“~— About Newcastle Works ArcelorMittal + F Hea £ z | ¢ * 2 = < i ‘ = : } Se , i il tn i ne
Slide 4: ArcelorMittal South Africa
ArcelorMittal South Africa • Vanderbijlpark plant – 4.5 Mtpa Crude Steel Capacity • Saldanha Steel – 1.2 Mtpa Crude Steel Capacity • Newcastle plant – 1.9 Mtpa Crude Steel Capacity • Vereeniging plant – 0.4 Mtpa Crude Steel Capacity Thabazimbi Johannesburg Vanderbijlpark Vereeniging Sishen Newcastle
Slide 5: Brief History
Brief History • Newcastle Works • Originally part of a government run organisation (ISCOR). • The then government chose to Newcastle build a plant in Newcastle to promote industrialisation in the area and optimise use of nearby resources and ports. • Designs began in 1969 and the plant began its ful
Slide 6: Newcastle Works 2011 (2010)
Newcastle Works 2011 (2010) • Liquid Steel Production (‘000 tons) 1 064 (1 563) • Sales tons (‘000 tons) 1 039 (1 490) • Percentage Domestic Sales 74% (54%) • Manpower 1 715 (1740) • Area of Site 1697 ha • Perimeter 18.97 km • Rail Networks 90 km • Electricity consumption 1 752 Mwh/day (1 688) • Pri
Slide 7: NC Management Team
NC Management Team Gerald Gadd General Manager Tel: 034-314 7001 Fax: 034-314 7406 M: 083 304 0117 Berndt Gevers Prakesh Krishanlall Colin Hill Fanie Conradie Bruce McQuade Act Works Manager: Act Works Manager: Works Manager: Ops Works Manager: Ops Manager: Medium & Eng & Projects Eng & Projects Met
Slide 8: SHERQ
SHERQ
Slide 9: Monthly Follow-up Chart: Combined Injuries
Requested on: 2012-06-01 10:44 Monthly Follow-up Chart: 2012 KPI Special Group NC-All Bonus KPI's - 739 Kpi Number PI Description Unit 7176| NEW-SHRQ Combined Injuries (LTI & RWDC) # per month 7.00 Month Actual Forecast Budget Jan 2.00 2.00 Feb 3.00 2.00 Mar 6.00 2.00 ‘Apr 0.00 2.00 6.00 May 2.00 Ju
Slide 10: Monthly Follow-up Chart: LTIFR
Requested on: 2012-06-01 10:44 Monthly Follow-up Chart: 2012 KPI Special Group NC-All Bonus KPI's - 739 Kpi Number _ KPI Description Unit 6486) NC-LTIFR (Cum) Newcastle LTIFR ial Month Actual Forecast Budget Tan 0.00 039 Feb 02 035 Mar 733 039 350 Apr 039 035 May 0.80 099 Tan 035 Tal 035 3.00 Aug 03
Slide 11: SHRQ
SHRQ Safety: Best ever LTIFR of 0.94 achieved in 2011 and 0.79 YTD. Record run of 3.69 million man-hours (126 days) worked without an LTI during 2010. Achieved a Level 5 rating for all ten ArcelorMittal Fatality Prevention Standards during June 2011 (first site in the global ArcelorMittal Group)
Slide 12: SHRQ
SHRQ • Management Systems: • ISO 9001:2008 certification - Quality Management System • ISO14001:2005 certification - Environmental Management System • OHSAS 18001: 2007 certification - Occupational Health & Safety Management System • Risk Management: • Comprehensive risk assessment and management pr
Slide 13: Environment
Environment FOCUS POINTS: • Zero Effluent Discharge (ZED) implementation. • Water use license amendment • Closure and capping of historical disposal facility • Historical pollution rehabilitation. • implementation of a Strategy for the containment and treatment of storm water. HOLISTIC ENVIRONMENTAL
Slide 14: Capex spent on Environmental projects to date
Capex spent on Environmental projects to date Year Project Capital 1998 – 2001 Masterplan studies R16.8m 2001 Old Waste Site cut-off trenches R3.5m 2003 & 2010 New waste site & phase 2 R49m 2003 - 2008 Water strategy (phases 1 – 4) R191m 2004 – 2012 Rehabilitation R33m 2000 – 2010 Air Quality projec
Slide 15: Newcastle Works
os Newcastle Works ArcelorMittal
Slide 16: Newcastle Works Production Flow and Equipment
Newcastle Works Production Flow and Equipment Gerald Gadd GM Newcastle Works 15
Slide 17: Newcastle Works Metallurgical Operations
Newcastle Works Metallurgical Operations Colin Hill Works Manager: Ops. Metallurgy 16
Slide 18: Newcastle Works Rolling Operations
Newcastle Works Rolling Operations Fanie Conradie Works Manager: Steel Plant Billet Mill Rod Mill 17
Slide 19: Newcastle Works Rolling Operations
Newcastle Works Rolling Operations Bruce McQuade Manager Bar & Medium Mill Medium Mill Bar Mill 18
Slide 20: Market Related Issues
Market Related Issues
Slide 21: Main Industries
Main Industries 1. Reinforcing 2. Structural steels 3. Rails 4. Low Carbon Wire Rod: - Commercial wire rod (Fencing, Mesh, Binding Wire) - Steelwool - Welding wire (MIG, electrodes) 5. Grinding Media 6. High Carbon Wire Rod: - Rope wire rod - Bedding wire - PC strand - Hose wire - Bead wire 7. Black
Slide 22: Market Distribution
-_ Market Distribution ArcelorMittal Zimbabwe Namibia Botswana 21
Slide 23: Local Sales per Product Group
Local Sales per Product Group Newcastle Works 2011 Actual Wire Rod - Welding, 1.1% Billets, 1.0% Blooms, 0.1% Alloyed Spring, 0.3% Wire Rod - Mesh, 8.5% Heavy Sections, 12.2% Wire Rod - Low Carbon, 15.5% Light Sections, 13.0% Wire Rod - High Carbon, 14.4% Merchant Bar Quality, Wire Rod - Free Cuttin
Slide 24: Despatches per Market - 2011
Despatches per Market - 2011 AOL Transfers 5% 9% Export 12% Domestic 74%
Slide 25: Export Sales per Product Group
Export Sales per Product Group Prime including Africa Overland Actual 2011 Wire Rod - Welding 1% Wire Rod - Mesh Billets 5% Blooms 10% 0% Wire Rod - Low Carbon 16% Heavy Sections 11% Light Sections Wire Rod - High Carbon 8% 8% Wire Rod - Cold Heading Quality Merchant Bar Quality 0% 1% Rebar 40%
Slide 26: Financials
=~ ArcelorMittal
Slide 27: Turnover vs. Operating Profit
Turnover vs. Operating Profit R’mil R’mil 4,000 1,660 1,460 3,500 1,260 3,000 1,060 2,500 Operating Profit 860 Turnover 2,000 660 1,500 460 1,000 260 500 60 - (140) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 2012 Act Turn
Slide 28: Cost of Sales vs. Volume
Cost of Sales vs. Volume 12,000 500 450 10,000 400 350 8,000 Cost of Sales R/ton Volume '000 ton 300 6,000 250 200 4,000 150 100 2,000 50 - - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 2012 Act Cost of sales R/ton Volume
Slide 29: Analysis of Cash Cost Allocation (2011)
Analysis of Cash Cost Allocation (2011) Energy & Water 10.1% Other Refractories 0.7% 3.9% Other General Expenses 2.8% Maintenance 3.3% HQ Cost 2.8% Labour 6.3% Raw Materials 70.1%
Slide 30: Analysis of Cash Cost Allocation - Variable (2011)
Analysis of Cash Cost Allocation - Variable (2011) Operating Cost, 14% Other Raw Materials, 3% PCI Coal, 2% Coking Coal (Del), Purchase Scrap, 39% 1% Alloys, 10% Iron Ore (Del), 31%
Slide 31: CAPEX – R'mil
CAPEX – R’mil 450 415 400 359 350 2004 300 281 2005 264 255 2006 250 250 2007 199 2008 200 2009 2010 150 2011 107 108 2012 100 50 0 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 32: Blast Furnace N5 Cold Furnace and Shell Burn Through
Blast Furnace N5 Cold Furnace and Shell Burn Through December 2010
Slide 33: Blast Furnace Average Tonnage per Day
NEWCASTLE WORKS Blast Furnace Average Tonnage per Day 6,000 Planned Dust Catcher maintenance incident [5 Aug] extended. 5,071 4,989 5,000 4,801 4,507 4,450 4,446 4,353 4,051 4,104 4,000 3,845 3,737 3,098 3,000 Recovery from cold Hearth incident 2,000 1,168 1,000 423 332 - - - Jan 11 Feb 11 Mar 11 Ap
Slide 34: Cold Furnace – Short description
Cold Furnace – Short description • Closed cooling water leak (identified as a tuyere) • Stop for Planned Maintenance (51hrs) – Found another water leak on inspection hole – First time ever to find an inspection hole leaking water • Unstable burden descent after start-up • Stop to replace 3 damaged b
Slide 35: Typical Blast Furnace Layout
Typical Blast Furnace Layout Water leak Burn through Tap hole 34
Slide 36: Stave Row 5
Burn-through 26 Dec Stave Copper Cast Iron Row 6 Stave 27 Stave 26 Stave 25 Stave 24 434 433 432 431 430 429 436 435 Stave Row 5 Break-through on shell and expansion bellow. Large Stave body burned away and coke particles exited the internal water leaks on adjacent furnace here stave pipes 432 and 4
Slide 37: Burn-through 26 Dec
Burn-through 26 Dec Photo from mini-reline during 2008 36
Slide 38: Burn-through Dec
ArcelorMittal Burn-through 26 Dec “-_=~ %
Slide 39: Stave Row 5 Repair Plan
Repair Plan Stave Copper Cast Iron Row 6 Stave 27 Stave 26 Stave 25 Stave 24 X Install 2x Ledge- 436 429 Install 2x Ledge-coolers coolers in series in series with current Stave with current system Stave Stave Row 5 cooling cooling system Install 1x Cigar-cooler connected to the closed cooling system
Slide 40: Lessons learnt
Lessons learnt • Water leak was not deemed excessive – In future the furnace will be restarted immediately after finding water leak. • Coke burdening to be more aggressive – Stay on all coke (no PCI or gas) operation for longer before and after shut downs • Abnormal failure of blow pipe doors – Impl
Slide 41: Blast Furnace N5 Dust Catcher Failure
Blast Furnace N5 Dust Catcher Failure August 2011
Slide 42: Newcastle Works – Blast Furnace Dust Catcher Failure
Newcastle Works – Blast Furnace Dust Catcher Failure Event- •Dust catcher failed on 5 August 2011 while starting up the Blast Furnace after a 39 hour maintenance stop. New cyclone vessel- •By 8 August 2011, we had been sent photos of a cyclone vessel that could be made available to us from within th
Slide 43: Overview of Damage
Overview of Damage 2012/06/04 ArcelorMittal South Africa Newcastle Works 42
Slide 44: Repair Plan
Repair Plan 2012/06/04 ArcelorMittal South Africa Newcastle Works 43
Slide 45: Management Drives
-_ ArcelorMittal Management Drives
Slide 46: Newcastle Master Plan
Newcastle Master Plan 2011 2012 2013 Work streams Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Method Impact Saving Ideas (Fixed, Var., Income) 1 EBITDA Cost Savings Ideas Gains Management Gains Management Processes Standardization, Std Meetings, 2 Visual Management •Implement OMI / DRM •Implement Supporting Tools
Slide 47: Newcastle Works – Major Projects
Newcastle Works – Major Projects Blast Furnace Reline •Tenders have been received for a number of long lead items; •Preparing detail costing and scope to get overall approval; •Reline duration planned for 100 days, starting 5 May 2014; •Attention is given to the major problem with shortage of skille
Slide 48: Newcastle Works – Major Projects
Newcastle Works – Major Projects Mills •The rolling cycles and stock holding is being adjusted for market conditions. •Re-bar straightening capacity is increased to exploit market opportunities. ZED •Delay in Group approval – additional information required about the overall coke oven gas cleaning.
Slide 49: Thank you
ArcelorMittal South Africa — Investor Presentation (June 2012) on 6ix