Transnet Port Terminals is patting itself on the back for having cut costs for ArcelorMittal South Africa (Amsa) at Richards Bay, thereby helping to retain 3,500 jobs that would have been at risk if the steelmaker had closed its long-steel products (longs) business.
Thulasizwe Dlamini, managing executive of Richards Bay terminal for Transnet, said improvements in efficiency at the port had created savings for the steel giant.
This had been achieved by speeding up the berthing of ships bringing in coking coal for Amsa’s furnaces, which helped reduce demurrage costs, and by eliminating double-handling costs.
“After being told Amsa is struggling, we looked for areas where we can reduce costs for them. We looked at opportunities in their value chain where we could cut costs to help the Amsa turnaround plan,” Dlamini said.
Amsa, a unit of Luxembourg-based ArcelorMittal, said this month it would suspend plans to mothball its longs business in Newcastle and Vereeniging, thanks in part to Transnet pledges of improved efficiency.
When it announced the closure possibility in November last year, Amsa blamed its business woes on Transnet’s failures, weak local demand due to economic stagnation and the preferential pricing system for scrap metal, which it says makes its longs operation less competitive.
Dlamini said the terminal had delivered on its promise of improved efficiency.
“When [ships] wait outside at the berth, they simply accumulate costs by waiting outside and not being productive. We have made sure that as soon as they arrive at anchorage, we accommodate them to come inside the terminal to dock immediately, so they do not incur the charter costs without any activity taking place.”
We have made sure that as soon as they arrive at anchorage, we accommodate them to come inside the terminal to dock immediately
— Thulasizwe Dlamini
He said other handling processes in and around the terminal had been streamlined, further reducing Amsa’s expenses. “The handling costs are gone, the handling cost outside the terminal is gone, that is what we call the reduction of double-handling,” he said.
Dlamini said repairs were under way on the coal conveyor belt that Amsa uses at the port, which would cut costs further. It is one of three conveyor belts damaged by a fire in 2021.
“When the Amsa conveyor belt comes back, we will save them more money. We will reduce the cost of shuttling from the vessel to the Amsa warehouse within the terminal.
“Because of the absence of the conveyor belt, we are unable to efficiently load their rail wagons, they are doing a bit of road haulage, so once the belt is back and we are loading rail wagons efficiently they eliminate the use of road; so there is still room for further cost savings, depending on the return of the conveyor belt.”
Dlamini said the return to service of the conveyor belt would cut by half the time needed to offload a coal ship, which now takes about two weeks. “It will help us to efficiently load the rail wagons. It is important the belt comes back.”
Amsa was not able to comment this week due to its closed period.
But two weeks ago Amsa said its longs business was stable due to improved operations at Richards Bay, the suspension of load-shedding and the nonrenewal of the export ban on scrap steel.
Amsa CEO Kobus Verster told reporters the company was backing its longs business.
“We are committed to keep it operational and to find additional benefits we have identified,” he said. “What has complicated the longs business is the extremely depressed domestic market. Domestic dispatches sit at the lowest level in the history of the business. Longs is used in construction and infrastructure applications, which domestically is not happening.”
Verster said that apart from the 3,500 jobs at Amsa directly tied to the longs operation, closing it would affect more than 80,000 jobs in the rest of the value chain.
“If you close the longs products, you will close some mines, you will close various other downstream organisations and you will close suppliers into that area. You will close some of the services provided into various mills.”
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