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July 28 (Reuters) - ArcelorMittal South Africa is considering investing in rail transport equipment, Chief Executive Kobus Verster said on Thursday, after a decline in first-half steel production partly blamed on logistics problems dampened strong earnings.
The South African unit of the world’s second largest steelmaker ArcelorMittal SA reported a 22% jump in first-half headline earnings to 3.025 billion rand ($180.75 million), as the group posted a second-quarter core profit (EBITDA) of $5.16 billion, topping the $5.09 billion forecast by analysts in a company-provided poll.
Higher steel prices helped offset ArcelorMittal South Africa’s lower steel production, which decreased by 30% to 1.1 million tonnes in a first half impacted by rail service unavailability, labour disruptions and electricity cuts. The company relies on rail to move its raw materials.
South Africa’s state-owned rail monopoly Transnet has been operating below capacity due to the shortage of locomotives as well as cable theft and vandalism, affecting the operations of firms that move bulk commodities.
Verster said ArcelorMittal South Africa, which lost about 600 million rand during the first half because of rail service disruptions, was considering procuring locomotives and wagons, in partnership with a third party equipment supplier.
“As soon as we are allowed, we want to participate in rail access, either directly or through a third party, most likely a third party to solve the longer-term problem,” Verster said during a results call.
In the short term, ArcelorMittal was exploring using trucks as an alternative, he said. The company was also helping Transnet secure its network from theft and vandalism by providing drones.
In April, Transnet invited bids from private firms to operate sections of its freight network, as it seeks investment into its deteriorating infrastructure.
