ArcelorMittal SA faces fresh price probe
Tinplate hike irks canners
October 20, 2009
By JUSTIN BROWN and Reuters
ArcelorMittal South Africa faces further excessive pricing charges after the Department of Trade and Industry (dti) lodged a complaint against the dominant steel maker for sharply increasing tinplate prices in April by as much as 79 percent.
A representative of the SA Fruit and Vegetable Canners Association, who wished not to be identified, said the association had alerted the department of its concerns about the increase in tinplate prices and the department had in turn lodged the complaint with the Competition Commission.
"The dti lodged its complaint on behalf of all tin can users, including fruit, vegetable, metal and baby formula tin users," the representative said.
Tins and cans made from tinplate are mainly used for beer and soft drinks, as well as fish, meat, fruit and vegetables.
"The April increase in tinplate prices has an enormous impact on the users of tinplate. The average cost of a tin can rose by 45 to 55 percent."
Tshifhiwa Madima, the department's director of agro-processing, was not available to comment on the matter.
Tembinkosi Bonakele, the deputy competition commissioner, confirmed that the regulator had received a complaint from the dti regarding ArcelorMittal SA in May or June.
The commission was conducting an investigation into whether ArcelorMittal SA was charging excessive tinplate prices. Bonakele could not say when the inquiry would be completed.
ArcelorMittal SA chief executive Nonkululeko Nyembezi-Heita was aware of the complaint lodged with the commission after the company raised tinplate prices in its first quarter.
"We raised tinplate pricing by 70 percent... and the canners association has raised a complaint with the commission in relation to that," Nyembezi-Heita told reporters at a media briefing.
She said ArcelorMittal SA was yet to receive full details about the complaint, as the commission had not formally raised the issue with the firm.
ArcelorMittal SA already faces the prospect of a penalty in a separate case after the competition authority announced last month that the company could be fined 10 percent of its annual revenue and exports for fixing prices with other companies.
The firm also settled a pricing dispute with Harmony Gold and DRDGold in September.
ArcelorMittal SA reduced prices for tinplate by between 26 percent and 30 percent last month, citing a stronger rand against the dollar.
The firm expected demand this year to be boosted by a rise in infrastructure projects on the continent and by deliveries to power stations being built by power utility Eskom.
Nyembezi-Heita said Eskom would need to raise power supply to South African steel producers next year as the steel market was set to rebound.
"We can't continue to have (power supply) uncertainty hanging over our heads," Nyembezi-Heita said.
Last year, Eskom asked most big producers in South Africa to trim power consumption by 10 percent due to a power shortage in the country.
Arcelor Mittal SA's shares on the JSE were last quoted unchanged at R114.50 from Friday's close. This share price valued the local steel maker at R46 billion.
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