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Edited Transcript of ACL.J earnings conference call or presentation 1-Aug-19 8:00am GMT

Q2 2019 Arcelormittal South Africa Ltd Earnings Presentation

Gauteng Aug 5, 2019 (Thomson StreetEvents) -- Edited Transcript of ArcelorMittal South Africa Ltd earnings conference call or presentation Thursday, August 1, 2019 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Avinash Maharaj

ArcelorMittal South Africa Ltd - CFO & Executive Director

* Hendrik Jacobus Verster

ArcelorMittal South Africa Ltd - CEO & Executive Director

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Presentation

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Unidentified Company Representative, [1]

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Good morning, ladies and gentlemen. The (inaudible) Society of Southern Africa would like to thank ArcelorMittal for this presentation this morning for coming to share results in difficult circumstances. But to the management, to the executive, the members of the board and the executives that are with us this morning, we just once again thank you for inviting us. As you know, Mittal comes from the old Iscor, which was formed in 1928. It was listed in 1989 and was listed as a composite company. Since then, some of the assets like Kumba have been split off from the company. And I'll just share a personal story with you that I think it was round about 1993, 1994, we used to have a TV program called Diagonal Street, and we all had to make recommendations. And one night I was on the panel, and I recommended Iscor. Iscor share price was 120. And as I said it was a composite company, it still had Kumba and a few other subsidiaries with it, which were later split off. And the trade share price then was 120. The response to my recommendation the next day was one of great surprise.

Now today Mittal share price is around about 240, as I saw it last night -- at the close last night. So I'm not saying anything, but I do remind you that the fact that this is times of adversity and in adversity, there is opportunity. So sir, we're looking forward to you to sharing with us this morning and the results for the past 6 months. And dare I say what we can expect in the next 6 months, but thank you very much.

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Hendrik Jacobus Verster, ArcelorMittal South Africa Ltd - CEO & Executive Director [2]

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Thank you very much, Peter, for that introduction. Good morning, ladies and gentlemen, and welcome to the presentation of our half year results for the 6 months ending June 2019. Welcome to some of the board members present here today as well as senior management of ArcelorMittal. A special welcome to our new Chief Operating Officer, Jake Olivier. This will be -- he joined us in March, and he will -- this will be his first presentation, so welcome Jake.

On the format, I will take you through an overview of the year, followed by a review of the steel markets and the operating environment. Desmond will look at the finances. At the back end, I will come back to discuss summary of the key strategic initiatives, especially what we are doing and planning to do in this challenging environment. And I will give a brief outlook of what's coming for the next 6 months.

If we look at the overview for the year, I mean after witnessing the structural improvements in the global steel industry, we are once again experiencing challenging market conditions, with resulted weakening international steel prices as well as falling demand, especially in Europe and in South Africa. Both have a negative impact on our results. The revenue declined by 5% as domestic economy remains very close to recession levels. Apparent steel consumption reduced by a further 2%. It's now only 70% of the levels reaching 2008. So we effectively, from a consumption perspective, are at a 10-year low point.

International steel prices decreased by 13%, although this was partially offset by weakening in the exchange rate. The company's raw material basket, which represents 51% of our total production costs. So iron ore and coal costs increased by 33% and 15%, respectively. Industrial tariff increases is already -- in already uncompetitive electricity rail and port costs, those rose by 6% of, as I mentioned, a very high base. We managed to reduce our fixed costs in absolute terms by 3%, despite the inflationary pressures on labor and energy. This is the indication that our business transformation program is beginning to yield benefits, albeit insufficient to cover the significant increases of regulated prices and raw material costs. The lower revenue and higher costs result in a decline of our EBITDA to a level of ZAR 167 million. While headline earnings profit from ZAR 54 million profit last year moved to a loss of ZAR 638 million for the 6 months. On the positive side, we've concluded the agreement to acquire Highveld heavy structural mill, and we've also negotiated the renewal of a long term 4.5 billion borrowing facility on mainly the same terms as currently.

Looking at safety. Safety remains our #1 priority. The half year's LTIFR rate of 0.38 was achieved compared to 0.83 in the comparable period. That's quite a substantial improvement. The performance improvement reflects the renewed energy invested in many activities in the health and safety side in the organization. Some of them are mentioned on the slide there, but we will continue our efforts to achieve zero harm in steel making.

Looking at the global steel environment. I mean despite the negative sentiments in the global markets, crude steel production increased by 5% to 925 million tonnes for the 6 months. China increased production by 10%, North America by 1%, while South America and Europe registered declines. Despite plant closures as well as environmental shutdowns, Asian market share increased by 2 percentage point to 71%. China now accounts for 53% of global production against 51% in the previous period. India, as you may recall, which overtook Japan as the second largest crude steel producer in 2018, has maintained its position in this period. Africa's output increased by 8% to 7.8 million tonne. That's mainly by Egypt. As a matter of interest, Egypt's market share is 55% of Africa's steel output, followed by South Africa's 41% and Libya by 4%.

Looking at the price spreads. China hot rolled coiled prices declined by 13% in dollar terms while our sales price basket fell more aggressively by 15% in dollar terms.

Turning to the raw material basket. The international raw material basket rose by 7% in dollar terms, mainly as a result of the aggressive 28% increase in the price of iron ore. Although largely flat in dollar terms, AMSA's raw material basket rose by 16% in rand terms, mainly also due to the sharp increases. Our iron ore price increased by 53% and coking coal by 15%. So unsurprisingly, price spreads reduced by 33% to $95 per tonne.

If we look at the operational review on the flat side of the business, that's now Vanderbijlpark and the Saldanha Steel operations. Liquid steel production reduced by 11% to ZAR 1.6 billion, that's mainly as a result of a planned interim stave repair at Vanderbijlpark Works blast furnace D that took 60 days. That was successfully completed in June. So expectedly capacity utilization reduced from 87% to 78%.

Coming to the other divisions in the organization. The 2-month labor strike had no notable impact on production. So with a weak economy, a struggling construction sector, uncertainty in the mining, the closure of various pipe and tube making operations and also more difficult credit available to customers, the flat block sales fell by 13% for the 6 months. This 34% reduction in exports that reflected the buildup of slabs to cater for the downtime as a result of blast furnace D stave repair. Domestic sales were down 4%.

Coming to our customers in both the flat and long downstream market is a need for tariff protection against import -- import of steel and imported steel products. This is despite the fact that AMSA continued to support secondary exports using our flat and long steel by ZAR 174 million in the 6 months period, that's marginally up from the previous period. Given our commitment to improve our quality, the coating upgrade of Galv #3 in [Vanderbijl] was completed in this period and the planned upgrade of Galv line #5 have started. As a result of the weakening in the domestic market, the startup of blast furnace D has been postponed until we see a reasonable uptick in domestic demand. And the same with Saldanha, due to the high winter electricity tariffs as well as high iron ore prices, production in Saldanha has been reduced by around 20%.

Looking at the long side of the business, that's Newcastle, Vereeniging and the facilities at Pretoria Works, their liquid steel production increased by 14% to 847,000. That's mainly as a result of a good performance by Newcastle, especially on the blast furnace side as well as the restart in the latter part of January of the Vereeniging Works electric arc furnace.

Discounting the ramp-up of the electric arc furnace, utilization increased from 79% to 86%, falling back to 74% without the ramp-up. Sales volumes were largely flat, 752,000 tonnes. However, domestic sales fell by 77,000 tonnes or 14%. While Newcastle is operating at benchmark efficiencies on many of its major KPIs, continued cost reduction and further efficiency improvements initiatives are vital to enable that operation to improve its sells into mainly Africa overland as well as South Africa.

Looking at our Coke & Chemicals business. There we saw a production of market coke, down 29%. That's mainly due to more consumption of coking our own operations. However, we saw sales down by 43% and that's mainly due to a result of high stock levels at our customers as unfavorable electricity tariffs resulted in CapEx of production of our main customers.

I will now hand over to Desmond to deal with the finances.

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Avinash Maharaj, ArcelorMittal South Africa Ltd - CFO & Executive Director [3]

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Thank you, Kobus, and good morning, ladies and gentlemen. Compared to the corresponding period, revenue was down 5% to ZAR 21.7 billion. Sales price reductions, lower sales volumes, together with a sharp rise in raw material prices, resulted in a ZAR 1.4 billion reduction in EBITDA to ZAR 167 million. Domestic volumes declined 8%, while exports reduced by 12%, negatively impacting EBITDA by ZAR 470 million. Weaker steel prices, after stripping out the impact of exchange rate movement, impacted EBITDA by ZAR 1.9 billion with higher material costs having an impact of ZAR 546 million, mainly driven by the higher iron ore price. Increasing electricity, rail and other costs contributed another ZAR 507 million. This is partially offset by a weaker exchange rate which softened from 12.29 in H1 2018 to 14.20 in H1 2019. This contributed positively just under ZAR 1.3 billion.

Cost savings from our business transformation program contributed another ZAR 778 million. The EBITDA of ZAR 167 million is unpacked as follows: Flat steel products reported an EBITDA profit of ZAR 86 million. This represents a decrease of ZAR 1.1 billion over the corresponding period. Total shipments declined by 206,000 tonnes, with domestic shipments reducing by 52,000 tonnes or 4% and exports by 154,000 tonnes or 34%. Average net prices, in rand terms, increased by 7%, while local prices increased by 5% and exports by 10%. Long steel products reported an EBITDA loss of ZAR 66 million, representing a weaker performance of ZAR 402 million compared to the corresponding period. Total shipments remained flat while prices in rand terms increased by 3%, with local prices increasing by 7% and exports by 1%.

Our Coke & Chemicals division reported an EBITDA of ZAR 100 million, substantially lower than the -- by -- substantially lower by ZAR 93 million when compared to the corresponding period.

Sales volumes of market coke decreased by 38,000 tonnes, mainly as a result of increased internal coke requirements for steel production. Sales prices on coke remained flat between the 2 periods. We reported a headline loss of ZAR 638 million. This is weaker by ZAR 692 million when compared to the previous headline profit of ZAR 54 million.

Our net borrowings of ZAR 1.7 billion was restricted to an increase of ZAR 1.2 billion when compared to December 2018. We generated ZAR 334 million from operations during the first 6 months of the year. Working capital absorbed ZAR 578 million with inventories being higher by $602 million. This is despite a reduction in metal and iron ore inventory, offset by higher coke inventory and increased material prices.

Receivables increased by ZAR 849 million while payables increased by ZAR 873 million. We incurred ZAR 126 million in net finance costs. This is significantly lower than the prior period, reflecting the lower average net debt position of the organization. ZAR 862 million cash was incurred on capital projects, which I will cover a little later.

I'm also glad to report that we've renewed the borrowing based facility to the value of ZAR 4.5 billion for a 10-year -- for a 3-year tenure. This facility was concluded with HSBC, Absa Bank and other lenders on substantially the same terms and conditions as the previous facility agreement. Capital expenditure of ZAR 611 million is ZAR 240 million higher than the corresponding period, with around 75% being spent on sustaining operations, 10% on environmental requirements and the remainder being spent on strategic projects to enhance our quality and margin.

Investments at Vanderbijlpark included blast furnace D interim stave repair together with phase 1 of the Galv coating strategy. At Newcastle, we initiated work under (inaudible) renewal, and at Saldanha, we completed the installation of the corner arc side injectors.

Capital expenditure will continue to be guided by the Business Transformation program. Adhering to the discipline of operational sustainability and securing our market strength, targeting high return and niche opportunities. The acquisition of Highveld Structural Mill, which is a unique asset capable of producing heavy sectional structural steel for infrastructure development and with further investment, mainline rail. Localization of this mainline rail production will support jobs, strengthen industrial capacity and enable export opportunities. It will also enable the transfer of specialized intellectual property and international skills to South Africa from ArcelorMittal's international rail division. An initial payment of ZAR 150 million on the effective date is envisioned. A second possible payment of ZAR 150 million will take place on condition that a commercial agreement is concluded for the long term supply of sizable mainline rail volumes together with the funding being secured from the IDC or similar financial institution. The deal is subject to certain customary and regulatory conditions precedent. The effective date is expected either late 2019 or early 2020.

On this point, I will hand you back to Kobus, who will elaborate a little further on our strategic actions.

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Hendrik Jacobus Verster, ArcelorMittal South Africa Ltd - CEO & Executive Director [4]

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Thank you, Desmond. Ahead of an update on the strategic initiative, I think it's appropriate just to recap on the business context in reality, against which these initiatives are being implemented. So as stated previously, global steel production continued to increase, especially in China and North America. Domestic steel consumption is at 10-year low. Imports are increasing into South Africa, especially from China and the Far East. Local manufacturers for steel-based products still require protection against unfair competition. Understandably, in such a difficult market, we had to aggressively pursue cash generation and cash preservation as well as cost control. Some of the short term immediate activities initiatives implemented was to restrict order placements to aggressively reduce raw material and steel inventory levels. The impact of those would be seen in the second half of the year. We will reduce warehouse stock and some warehouses are closed. Staff is put on short time forced leave, and we also have done production cuts back at most of our operations.

Our sustainability and future profitability depend on the ability to compete with China sourced steel as well as our local competitors. Our Business Transformation program was launched last year, targeting a $50 per tonne cost reduction to be realized by 2021. For this year alone, annualized saving of 800 million has been targeted and on track to being realized. The bottom line impact of all these savings, however, being eroded by increases in various items, the regulated tariffs and high raw material prices, especially iron ore. As an example, the price of iron ore during the period has eroded earnings by ZAR 700 million for the period. So that just sort of highlights the need for South Africa to have a more developmental pricing on the raw material -- raw materials which are beneficiated.

In addition, there was the introduction of the carbon tax effect at the 1st of June. Unfortunately, it would put further pressure on our financials. That necessitated us to put in a carbon tax levy on certain of our steel products effective the 1st of July. All the above events have culminated in the announcement on the 10th of July of a major organizational restructuring consultation process, which contemplate to impact more than 2,000 positions in the company.

Evolving from 2018 to 2019, we have refined our strategy and -- to improve its sustainability and to fit within the current business context. The overriding message in this for the moment in 2019 is firmly on execution.

Let's briefly visit some of the more vital areas. The Business Transformation Programme, the core of our company strategy, is to develop an affordable asset footprint with a long-term enduring competitive advantage. And at the core thereof is the Business Transformation Programme, which by improving earnings will also improve our cash generation as well as our balance sheet. From a volume perspective, volume debottlenecking will enable us to improve costs through dilution further and better utilize our current assets.

At [Vanderbijl] we targeted around 300,000 increase in volumes by shortened furnace relines, optimizing ladle turnarounds and various other initiatives. Newcastle targeting the same amount of volume increase by blast furnace throughput as well as reducing pooling. This -- at Saldanha Works, the volume increase strategy has been replaced with a strategy focusing on reducing cost and improving efficiencies. After the successful restart of blast -- electric arc furnace at Vereeniging, the focus will now move to increasing the volumes, but also to improve the relative cost base of the Vereeniging operations as also development of certain additional product ranges.

On the commercial side, the targeting of import replacement and localization is vital in a now too slow and low growth domestic environment. Similarly, the adoption of a target market approach is needed to grow our market share in the domestic market. Placing the customer at the center of our business necessitates specific focus on product developments, on quality improvements and on-time delivery. Africa overland and East Africa are central to our sub-Sahara African strategy.

Newcastle Works. Central to the success of Newcastle is the reduction of cost of the iron steel making part of the business as well as the optimization of the rolling mill capacity. As mentioned by Desmond a bit earlier, the acquisition of Highveld Structural Mill enables the substitution of imports as well as our ability to execute on our future rail strategy. Public private partnerships. We're in discussions on potential co-investment opportunities to grow the market coke business. And for the longer term, overseen Thabazimbi beneficiation opportunities are also being investigated.

Increased self-sufficiency -- efficiency and/or cost linked supply contracts for primary raw materials and energy is necessary. If we look at environment, a revised environmental strategy is being implemented with a prioritizing environmental CapEx between 2019 and 2023. AMSA also aims to cap and reduce the generation and disposal footprint of waste and byproducts, while maximizing the monetization of our byproducts. The license to operate, we will continue to use the ArcelorMittal Foundation to contribute to social and economic transformation of South Africa through investment in social upliftment, education and economic development projects and initiatives. By working with government, AMSA aimed to contribute to the industrial policy targeting innovative steel-based manufacturing and export developments.

If we look at the outlook for the next 6 months, we expect the local market to remain subdued until we see real infrastructure spend and improved economic activities. Spreads should normalize with improved selling prices and lower raw material basket as part of sustaining the intensified fast-track implementation of the Business Transformation Programme, the announced organizational restructuring process will be completed in order to improve our labor productivity. Collaboration with key stakeholders on economic recovery and growth initiatives will also gain added impetus. As always, the rand/dollar exchange rate will have a -- continue to have an impact on the financial results, either positive or negative. But for the second 6 months, the main focus will be on cash generation and cash preservation.

Ladies and gentlemen, thank you. That brings us to the end, and I will now take questions. And I've got some colleagues here, so you can ask anything. Thank you.

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Questions and Answers

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Unidentified Participant, [1]

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I will go with the testing to result. I think apart from the rand, everything that could gone wrong, did go wrong, so I do feel for management. Can you just remind us, it seems like imports have gone up significantly on itself to a comparative period last year. Can you just remind us where we are in terms of that safeguarding tariff? Are we now at the 8% level because we started at 12%? When is it up for renegotiation? And yes -- and so that's my first question around tariffs and when it's up for renegotiation?

And then my second question is -- the last time at your FY '18 results, you spoke about potentially being part of the special dispensation group in terms of electricity tariff increases. Why are we seeing such massive increases on your logistic costs, particularly given that government is well aware of how tough the operating environment is for ArcelorMittal?

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Hendrik Jacobus Verster, ArcelorMittal South Africa Ltd - CEO & Executive Director [2]

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All right. Thank you. I think firstly on the tariffs, in terms of safeguards, we're at the 10% level, started with 12% in '17, reducing to 10% and will reduce to 8% in August of this year and fall away thereafter. I think 2 things to note. From the import perspective, you can always assume that half of that import roughly is grades that's not manufactured in South Africa. So to the extent that you have a diminished -- a lower local consumption, the proportion of that imported material not produced here would become bigger.

Secondly, in terms of safeguards, countries like Taiwan and Russia was exempt. So initially, from Taiwan, a lot of imports came in and then later from Russia, until it reached a certain level where we can apply for that extension to be taken away.

In terms of tariffs, I think both on electricity as well as rail and port costs. I mean we are substantially more expensive than -- compared to other operations in the world. The mere increase is actually from a substantial high base. If you look at our rail tariffs and stuff, even if you record a 5%, 6% increase, that seems to be relatively in line with inflation. But if it's off a base that's 60%, 80%, 100% more expensive, that becomes problematic. So we've applied for electricity special tariffs. To date, no positive response on that. I think the argument is that Eskom's average cost of production is at their sales prices. And then secondly, we are further engaging with all of these entities at all levels to try to get some -- I mean, we don't want special treatment. We want fair treatment. And remember, Fed relative to our competitors, who is China and the rest of the world. So that is what we are trying to achieve.

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Unidentified Participant, [3]

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The restructuring cost that you're anticipating, will they be taken in the second half?

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Hendrik Jacobus Verster, ArcelorMittal South Africa Ltd - CEO & Executive Director [4]

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Yes. Obviously, we've announced after year-end, we entered into a consultation process. We gave an indication of what type of numbers we envisage, but by law, there will now be a consultation process to narrow down that -- the numbers or -- and then also to execute. And at that time, it will be taken, and it will be -- it should be in second half.

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Unidentified Participant, [5]

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I've got 2 points to my comment, please. First one you range in internationally, steel prices that have been negative and demand equally also reducing. Consumption at a 10-year low. Is that a global figure?

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Hendrik Jacobus Verster, ArcelorMittal South Africa Ltd - CEO & Executive Director [6]

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No. That's South African numbers.

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Unidentified Participant, [7]

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South African only.

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Hendrik Jacobus Verster, ArcelorMittal South Africa Ltd - CEO & Executive Director [8]

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Yes. So if you look at consumption, consumption is at a 10-year low in South Africa. It's at the same level -- 70% of the consumption levels of 2008. Where in Europe, in an international perspective, we have seen a reduction in volume mainly in Europe.

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Unidentified Participant, [9]

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Right. Right. And then just looking ahead from there, we say domestic steel demand will remain under pressure, well that's exactly what you're saying, until real infrastructure spend and economic growth improve. Well, is it -- that signifies a possible long wait. If we just say real infrastructure spend, well, government hasn't got the money for real infrastructure spend. If we look at the latest GDP data, and it looks like the threat -- potential threat of going negative is a very real one. Under these circumstances, should we not just be looking at, perhaps, further reductions in demand and hence in production. And then the rolling over impact on that -- on a cost basis. Could you comment on that, please?

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Hendrik Jacobus Verster, ArcelorMittal South Africa Ltd - CEO & Executive Director [10]

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I think from a demand perspective, we need about, in South Africa, roughly about 1.8% economic growth to have flat steel consumption. Above that, you will see actually quite a hockey stick acceleration in consumption. So below that, there will be a further deterioration. So I think we aligned. What I'm trying to mention there is we're always very positive about potential climate, but we are not seeing any major construction projects being announced, being scoped. And to the extent that, that is not realizing, we don't see an improvement and most probably some downside. So from a cost reduction perspective, I mean, I've quoted the $50 per tonne that we need for a medium, longer-term sustainability. In our organization, we are working on higher numbers to -- because we think the potential pain can be more.

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Unidentified Participant, [11]

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Great comment. That is just backing the view that we take the -- your output forecast, we're probably looking at 0 to a low to no growth scenario for the foreseeable future. That could be 2 to 3 years ahead. Would you agree with that?

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Hendrik Jacobus Verster, ArcelorMittal South Africa Ltd - CEO & Executive Director [12]

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I'm not an economist and I hope you're wrong, to be honest. I hope you're wrong. I think your guess is as good as mine. Let's try to remain positive. We all know that government and its departments are trying hard in a very difficult environment to turn this ship around. So hopefully, something positive will come of that.

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Unidentified Participant, [13]

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I hope you're right. Hope is not necessarily a definable strategy though.

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Hendrik Jacobus Verster, ArcelorMittal South Africa Ltd - CEO & Executive Director [14]

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No.

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Unidentified Participant, [15]

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Desmond, could you please unpack those BTP savings that you had in your EBITDA slide in your waterfall chart? What those are? And then I just want to get a sense of where there is a line of defense. I'm just worried you have the [saying] expecting the rand to potentially be stronger in the second half of this year. We're not seeing significant improvement to steel prices and the iron ore price could stay higher for much longer than we anticipated. But what other line of defense do you have for the rest of this year?

And then in terms of this renegotiated 4.5 billion borrowing base facility, can you give us a sense of how much has already been drawn down? Because while your interest expense was down for this half, almost certainly it will increase significantly in the second half because your net debt has gone up. So can you just give us a sense of how much has been drawn down already? And I don't know if you're able to share this time what the covenants on net debts are.

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Avinash Maharaj, ArcelorMittal South Africa Ltd - CFO & Executive Director [16]

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Okay. So let's start with the business transformation part. So Kobus already highlighted some of the items in the business transformation, looking at debottlenecking and cost reduction. That strategy covers a number of different aspects, including renegotiating contracts. Looking at our productivity targets to -- and as part of that is Section 189. So there is a broad number of items to look at our cost savings actions. And that's what's really sitting in the BTP strategy, okay? It also includes negotiating with government and targeting those uncontrollable costs like electricity, port costs, rail costs that make up that number. The next question you asked about was the borrowing base facility. So the borrowing base facility, yes, was put in place. It's a revolving credit facility, which we use mainly at peak funding, which differs from day-to-day. So it goes up and down based on our requirements. It's not a set figure that we take on a specific day.

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Unidentified Participant, [17]

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(inaudible)

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Avinash Maharaj, ArcelorMittal South Africa Ltd - CFO & Executive Director [18]

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Yes, so it varies on a day-to-day basis, okay? So it could be 500 million one day and the next day, it could be 200 million, so depending on what we need at a specific point in time.

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Hendrik Jacobus Verster, ArcelorMittal South Africa Ltd - CEO & Executive Director [19]

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Maybe if I can comment on your lines of defense. I think it's not that negative. I think one -- you have to realize that in terms of our -- we have a structured improvement program that they have the objective to be long term sustainable. We've got quite an idea of our cost base relative to other cost base over the world from a benchmarking perspective. And we are comfortable that from an asset utilization efficiency perspective, we are there or thereabouts. It's not that we are very efficient. If you look at blast furnace D reline or the rebuilt stave repairs, that has put the blast furnace in an exceptional position to produce for another 15 years. So if you take for Vanderbijlpark blast furnace D and N5 in Newcastle, those 2 blast furnaces are the largest on the African continent. And we're able to produce at efficiency levels equal to European plants and other plants. For the next 6 months, we have the capacity to reduce our working capital substantially. So our objective is to be cash focused and to ensure that we are, from a cash perspective, in a strong position. There will be a normalization in spreads. As I said to you, there was a $95 present reduction. So normally, what you will find, if prices come down by 13%, you have an equivalent reduction in your raw material basket. As a result of the Vale incident, iron ore, I think about 100 million tonnes was taken out of the world market, resulting in the opposite of that happening. Now that will not continue forever. There is enough iron ore capacity available. So at some point in time, that should normalize, maybe not in 6 months, but at least in the next year. So preservation of cash and to the extent that the world is in worst shape, we will just intensify our reduction programs. We will temporarily reduce some of our volumes. I mean from a strategic perspective, longer term what we want to do is we want to increase the output on the current assets. It's the best investment you can make. But in the short term, if that's not required, we will reduce the volumes. Anything else? If not, ladies and gentlemen, thank you very much, enjoy your day. Thank you.