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ArcelorMittal SA's shares fall on government snub
Posted Mon, 02 Apr 2012

Shares in ArcelorMittal South Africa, Africa's largest steel producer, fell 5 percent on Monday on news it would be excluded from a government programme to roll out infrastructure projects using local materials.

The programme, designed to benefit local manufacturers, has made an exception in the case of locally produced steel because of the dominance of ArcelorMittal in the domestic market.

The company, the local unit of the global giant of the same name, said in a statement that its exclusion "... may unfortunately lead to further job losses in certain sectors of the steel industry."

The regulations to give preferential treatment to local producers came into effect in December.

Also on Monday South Africa's competition regulator recommended that the competition court slap a fine on the steel maker for price fixing.

ArcelorMittal South Africa could now face a fine of more than 3 billion rand ($390 million) with the Competition Commission suggesting the penalty be set at 10 percent of annual turnover.

Smaller competitor Evraz Highveld Steel and Vanadium is also likely to be hit with a fine.

"It is confusing, the government is giving conflicting messages about ArcelorMittal's inclusion in the economy," said Sasha Naryshkine, owner of Vestact Asset Management.

ArcelorMittal spokesman Themba Hlengani said that the company had not had any discussions with the South African government over the procurement programme.

"We have not engaged with them," he said.