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ArcelorMittal


Red88

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Showing encouraging signs of recovery after the prospect of injection of funds following the sale of the Macsteel interest. In spite of the criticism of AM being an outdated steel producer, in the African context it is indeed a sleeping Giant and an enormously important asset especially in view of the deteriorating Rand value. With patience, some rewarding growth results may be forthcoming after an economic upturn in South Africa. Any comments on this view?

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Yes I think they will and more in time. That of course depends on the recovery of the South African economy which is in intensive care at the moment. AM's market is mainly local and in Africa so it is not much affected by the US-China trade war. Negatives to AM's business are the import of cheap products from China that can be countered by import tariffs and a weaker Rand. A silent killer of the South African industrial capability is the loss of essential skills that is taking place on a large scale at the moment. Significant numbers of engineers, artisans, entrepreneurs and skilled business and professional people in their most productive years are emigrating mainly due to irresponsible government policy and statements and the corruption and poor governance of State Owned Enterprises. Australia, New Zealand, Canada and the UK are sucking up these talented and job creating individuals and leaving a vacuum that cannot be filled by our sub-standard education and skills development capabilities. ArcelorMittal has an enormous latent capability that needs to be brought to life again. Should there be no significant recovery in the economy the company faces closure and there will be further job losses contributing to the already crippling unemployment statistics and additional pressure on social services. The share price will reflect the developments and can well exceed R10 or if the negative forces prevail could drop off into oblivion.

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I think patience is the keyword. I was 50% down for a long time and now about 8% down. I think only lucky or extremely talented traders can buy at the right time when the stock bottoms. If the stock performs as it should in the coming year, 18% is nothing. I had a spell with Kumba and it was extremely rewarding.

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An upturn in the industrial sector next year should precipitate a further upward movement of the share price. AM has been strengthened financially by the sale of the interest in Macsteel and should be in a position to take advantage of an increase in local demand for steel products.

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