Johannesburg, Feb 11, 2010 (Business Day/All Africa Global Media via COMTEX) –DESPITE a very tough year for steel makers, ArcelorMittal SA (Amsa) is sitting on a cash pile of about R4bn, which it could use for acquisitions such as Zimbabwean steel maker Zisco, to invest in its own power generation or hold as a cushion until economic recovery is more certain.
But there may be opportunities for small companies with promising deposits of iron ore and coking coal, too.
Amsa says it is looking for investments or partnerships to ensure certainty of supply and pricing of these inputs. After losing last year’s arbitration over what it considered were its rights to participate in Kumba Iron Ore’s Sishen South project, it has started to engage with black empowerment groups with licences over potential iron-ore projects in SA.
Amsa CEO Nonkululeko Nyembezi-Heita has ruled out buying iron ore from outside SA as there is no shortage of the stuff in SA. The question is getting it at the right price. Amsa needs about 10,5-million tons of ore a year to produce at full capacity of 8-million tons. It buys about 6-million tons from Kumba and gets almost 3-million from Thabazimbi.
Amsa needs 1,8-million tons a year of hard coking coal, scarce in southern Africa. It has taken a stake in Coal of Africa, hoping its deposits prove viable, and is looking for other opportunities.
GETTING a read on BHP Billiton ’s first-half profit involves a little mental juggling. Profit for the first half was more than double that of the second half of the previous year, but down on the like period’s.
What’s more, current results were boosted by the sale of Ravensthorpe nickel mine. Take this gain out and net profit was down from 6,1bn to 5,7bn, a 7% decline on the like period’s. This is also its weakest first-half profit in four years.
That doesn’t sound good, but it was solidly higher than analysts’ expectations. Even better, the company managed to sell more stuff than it ever has before.
The overall result was a slightly disappointing dividend of 42 US cents a share, a bit lower than expectations, at about 40% of earnings per share.
Overall, you have to say the results of the biggest miner in the world do not suggest a quick return to the glory days of 2007, either for itself or the world economy. Yet, operationally, all pistons are firing, and BHP’s size means it continues to motor through the storm with enviable stability.
Coming into office, newly installed President Jacob Zuma undertook to create 500 000 "job opportunities". Leaving aside the semantics of "job opportunities" as opposed to actual jobs, what he has delivered has been a net loss of 681 000 jobs between the beginning of the economic downturn in the third quarter of 2008 up to the fourth quarter of last year.
The immediate figures are, however, looking up. According to Stats SA, 89 000 net new jobs were created in the fourth quarter. With the economy recovering, hopefully this momentum can be sustained, even if most of the jobs created were in the informal sector and so not of the "decent" variety as defined by union federation and governing alliance partner Cosatu. Nevertheless, the brute reality is that government stimulatory efforts worked only marginally, if at all. This means either the efforts failed, or the headwinds were so strong that its efforts were counterbalanced by the downturn.
It’s unfair to lay all job losses at the government’s door; there’s only so much a government can do when the economy dips. There’s also only so much a government should do, bearing in mind that it’s invariably taxpayers’ money that funds public works-type projects that "create" jobs. Yet Zuma himself opened this door, inviting the public to judge the government’s effectiveness by this criterion.
The result has been a pretty horrible failure, and it calls for a reassessment of the government’s ability to create a positive business environment. That ought to feature prominently in Zuma’s address to the nation tonight.
Dave Marrs edits The Bottom Line.
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