Promit Mukherjee, Tanisha Heiberg
JOHANNESBURG (Reuters) – Steel producer ArcelorMittal South Africa has declared force majeure after a breakdown of a blast furnace at its Newcastle Works in KwaZulu-Natal province, it said on Wednesday.
The clause of force majeure, loosely translated as superior force, allows certain terms of an otherwise legally binding agreement to be ignored due to unavoidable circumstances.
Africa’s biggest steel producer, which is majority-owned by Luxembourg-based ArcelorMittal SA, said the blast furnace had suffered thermal damage and had been shut down for an estimated three weeks for repairs.
“The company has communicated with customers and has declared a force majeure in respect of the specific impact of this breakdown,” it said in a emailed response to Reuters.
ArcelorMittal, also the biggest steelmaker on the continent, produces close to 4.4 million tonnes of finished steel products in South Africa via four main steel plants.
Its Newcastle plant makes long steel products which are used in the construction industry and has a capacity of 1.9 million tonnes, or just over 150,000 tonnes monthly.
Its long products, produced from Newcastle and Vereeniging Works, contributed up to a third of its operating profit in 2019, according to the company’s annual report.
The company said it was unable to predict production losses due to the uncertainty around when it will be fixed.
“Every effort is being made to resolve the problem quickly and to restart production as soon as possible to limit the impact on customers,” it said.
A part of the production has been shifted to the Vaal Melt Shop at its Vereeniging Works plant, ArcelorMittal said.
Reporting by Promit Mukherjee and Tanisha Heiberg; Editing by David Goodman and Jan Harvey