ArcelorMittal’s plan to revive Saldanha Steel plant

ArcelorMittal South Africa (Amsa) is looking to restart its operations in Saldanha Bay and re-employ hundreds of people, an energy application lodged with the energy regulator shows. This is according to a report late last year put out by IOL.

After stating for some time that it might reopen the facility using hydrogen made from renewable energy, the steel company said it is hoping to make low-carbon iron at the facility.

It is also in talks with Eskom regarding a three-year electricity supply deal.

The reopening will result in 260 people being employed by Amsa and another 375 who will be on site contractors.

The company’s group manager, Tami Didiza said: “Amsa is working on its plan to achieve ambitious carbon reduction targets for 2030 and 2050 … The journey will involve close collaboration with several stakeholders, including local and international public and private sector participants.”

ArcelorMittal South Africa has said it plans to open its Saldanha Steel Works. However, in the latest release from the company it says that it will report annual financial results next month and it expects headline earnings per share to fall by between 60% and 65% in its year to end-December. It says the price of steel is falling faster than raw materials

An example of this, according Didiza, is the recently announced joint development agreement (JDA) signed between Sasol and Amsa, which will advance studies into two potential projects.

The first one is the Saldanha green hydrogen and derivatives study which will explore the region’s potential as an export hub for green hydrogen and derivatives, as well as green steel production; and the Vaal carbon capture and utilisation (CCU) study. The latter is to use renewable electricity and green hydrogen to convert captured carbon from Amsa’s Vanderbijlpark steel plant into sustainable fuels and chemicals.

“With the appropriate support, the restart of Saldanha Works as an early supplier of green-directly-reduced iron to the international market is a very exciting prospect. However, it is too early to share the specifics as these discussions are ongoing,” Didiza said.

In its application, National Energy Regulator of South Africa (Nersa) said that Amsa has approached Transnet, Eskom, the Western Cape Government and the Saldanha Bay Municipality for assistance with the restart of the Saldanha Works operations converting from the costly iron ore/coke steelmaking to an electric scrap-melting model. It will use 100% South African scrap metals.

The use of clean energy as a means of reducing carbon emissions is high on the agenda for global leaders and industry players converged in Egypt for the Climate Change Conference.

When asked to confirm whether Amsa reached out to these entities, Didiza said: “I’m afraid I cannot go into specifics but it is safe to say that Amsa is engaging a range of stakeholders to secure the appropriate support.”

Amsa closed its steel plant in Saldanha two years ago, partly because electricity costs got too high. It’s now looking to reopen the plant using green hydrogen rather than fossil fuels to make low-carbon steel.

Eskom spokesperson, Sikonathi Mantshantsha confirmed that Amsa did reach out to the power utility.

“Nersa approved Eskom’s application for a three-year negotiated pricing agreement (NPA) with Amsa Saldanha Works in Western Cape during August 2022. The application was made in terms of the electricity pricing policy and the amended short-term NPA framework. It is anticipated that Amsa Saldanha Works will restart in 2023. However, a successful restart does not only depend on an electricity pricing agreement with Eskom but also requires assistance from other suppliers to optimise costs.”

“Eskom supports de-carbonisation and green initiatives in the country and is aware of Amsa’s intent to move towards green steel. When economic conditions are favourable and the industry is earning higher profits, Amsa Saldanha Works will share some of the additional profit with Eskom to benefit the rest of the customer base,” he said.

The National Employers Association of South Africa’s Gerhard Papenfus said: “That is typical Amsa. For the restart of the Saldanha plant, they rely on preferential treatment from Eskom. They will also rely on preferential treatment in respect of scrap metal, to the detriment of the scrap metal industry.”

“As is the case for the entire steel industry, where import duties apply, somebody else foots the bill in order for Amsa to prosper.”

Cosatu Western Cape secretary, Malvern de Bruyn said the union welcomed the plans to reopen the plant whose closure saw around 900 workers lose their jobs.

“Cosatu welcome any project which can create sustainable jobs. Such an initiative will be a welcome boost for the people of Saldanha and surrounding areas. Cosatu will follow the developments,” he said.