ArcelorMittal South Africa Annual Report 2009 Operational results for the year ended 31 December 2009 2008 Revenue (Rm) 16 292    25 513 Net operating income (Rm) (614)     7 007 Liquid steel production ('f000 t) 3 428      4 084 Sales volumes ('000 t) 2 858      3 412 Domestic 2 079      2 835 Export 779 577 Domestic sales (%) 73 83 Capital expenditure (Rm) 630 1 035 Hot-rolled coil (HRC) export price USD/t (c&f)                       508 966 Number of employees 5 123      5 280 Total HRC cash cost Rand per tonne 4 070      4 032 Total HRC cash cost USD per tonne 482 488 ArcelorMittal South Africa produces at steel products at its Vanderbijlpark and Saldanha operations. Vanderbijlpark Works is the largest supplier of at steel products in sub-Saharan Africa. It has the capacity to produce 4.4 million tonnes of liquid steel each year, which is cast into slabs and hot rolled into heavy plate or coils. These are sold as hot-rolled strip or, through further processing, into cold-rolled and coated products such as tinplate and hot-dip galvanised, electro-galvanised and prepainted sheet. Vanderbijlpark Works meets more than three quarters of South Africa’s at steel product requirements. Saldanha Works, which produces thin and ultra-thin gauge hot-rolled coil for domestic and select export markets, is the only steel mill in the world to have a continuous production chain that obviates the need for coke ovens and blast furnaces. Together with Vanderbijlpark Works, its 1.3 million tonnes of liquid steel per annum amount to a combined capacity of 5.7 million tonnes. Operational review and locations Flat Carbon Steel Products Markets Domestic Sales of flat steel products in 2009 were 27% lower than in 2008. For the first nine months 2009 real spending on durable goods such as vehicles and household appliances declined by 14.4% as a result of the economic slowdown, low levels of consumer confidence and tight lending conditions by commercial banks. The most significant decrease in domestic sales during 2009 was in the building and construction industry, with flat steel product sales to the sector falling by 47%, followed by the automotive and pipe and tube industries, which both experienced a 44% decline in sales. International In comparison with the previous year, exports of flat products in 2009 increased substantially by 35%. Consequently, the share of flat product exports to total sales rose from 17% to 27%. Exports outside the African region remained at 11% of total flat steel product sales, confirming our sales strategy of focusing on the African continent. In 2009 our net realised export prices were on average 47% lower than in 2008, though prices increased by 19% during quarter four compared to the average price for the first three quarters. Net operating income – Flat Steel Products (Rm) 2009 2008 2007 2006 2005 -614 7 007 4 827 3 644 4 518