South Africa forms committee to monitor ArcelorMittal's pricing

South Africa has set up a task team to monitor ArcelorMittal SA's implementation of pricing principles, a reprieve to the country's largest steel producer controlled by NRI steel baron Lakshmi Mittal.

The pricing committee or task team was set up by Trade and Industry Minister Rob Davies to monitor the company's implementation of pricing principles agreed to with the state.

Mittal was reported to have engaged senior leaders of the government last year, which now appears to have resulted in a task team to monitor pricing principles.

The task team was set up this week after complaints from the opposition Democratic Alliance party that ArcelorMittal SA was in breach of its undertaking not to increase prices after the government introduced tariff duties on cheap Chinese imports which had made local production not a viable option.

ArcelorMittal SA was facing closure of some of its plants amid falling steel prices globally. The threat of closure at one stage threatened to shut down the entire town of Vanderbijlpark that depended on the steel plant there as the biggest employer.

Last year, Mittal had to call on South African government authorities to help bail out his South African operations amid a threat of closing down a huge plant which would effectively have seen an entire town being destroyed economically.

Mittal was vital for the South African government when he came to the rescue of the ailing state-owned steelmaker Iscor more than a decade ago. After turning Iscor around, Mittal bought out the manufacturer with government support.

But in recent years, Mittal has been under pressure from the South African government because of the company's policy of parity pricing which forced local buyers to pay international prices for its products, even forcing some smaller companies into closure due to unaffordability.

Despite the government intervention, ArcelorMittal SA announced this week that its loss for last year would be 22 times more than that of 2014.

The announcement came just a few weeks after the company sold more than R4 billion of shares to settle its debt and increase investment in plants. But the company is still reviewing the viability of its steel plant at Saldanha Bay.

Outgoing CEO of ArcelorMittal SA, Paul O' Flaherty, said even the government tariff introduction was not enough to rescue the Saldanha plant which would be shut down by 2018 if suitable solutions could not be found. The company's shares have plummeted more than 90 per cent in the past eight years.

Once voted South Africa's richest businessman for six years in a row, Indian-origin Mittal started dropping down on the annual list of South Africa's richest businessmen list three years ago and did not feature at all in the 2015 edition of the Sunday Times Rich List.