Noluthando Gosa-linked ArcelorMittal SA pays Eskom $171 million for electricity

Key Points

• ArcelorMittal SA spent $171 million on Eskom electricity in 2024, a 14% rise, as energy price hikes and logistics woes deepen the company’s financial strain.
• ArcelorMittal SA’s decade of Eskom reliance drove electricity costs up 835%, as cheap imports and weak infrastructure deepened losses for the Gauteng steelmaker.
• Noluthando Gosa’s steel investment faces growing headwinds as South Africa’s steel demand plunges, imports rise, and global prices weaken for the third straight year.

ArcelorMittal South Africa (ArcelorMittal SA), the Gauteng-based steelmaker linked to South African businesswoman Noluthando Gosa, spent $171 million on electricity from Eskom in 2024, according to its newly released financial statements.

The 2024 annual report, published on April 17, reveals that it paid R3.2 billion ($171 million) to the state-owned utility company last year. This marks a 14.29 percent increase from the R2.8 billion ($150 million) it spent in 2023. The rising cost highlights the ongoing struggles the steelmaker faces with high energy expenses and continued infrastructure issues.

A decade of rising tariffs and state reliance

ArcelorMittal SA’s financial struggles underscore the heavy toll of relying on state-owned utilities. Over the past decade, the company’s electricity costs have surged by 835 percent, significantly impacting profitability. Yet, Eskom’s troubles are only part of the picture. Freight bottlenecks and rising charges from Transnet Freight Rail have hindered logistics, reducing sales volumes and deepening the company’s losses.

Additionally, a surge in cheap imports, particularly from China, has put further pressure on the business. In response, ArcelorMittal SA has ramped up its lobbying efforts, pushing for higher tariffs and stricter regulations to protect its long steel division from the flood of subsidized competition.

These challenges have forced the company to write down R2.7 billion ($145.25 million) in long steel assets over two years. To address the shortfall, its parent company increased a shareholder loan from R3.7 billion ($199.05 million) to R5 billion ($269.02 million), while the state-backed Industrial Development Corporation (IDC) stepped in with R1 billion ($53.8 million) in short-term funding, a R380 million ($20.45 million) credit facility, and a R1.68 billion ($90.39 million) support package.

Demand collapse and global market woes

Despite the leadership of seasoned business figures like Noluthando Gosa, who holds a 6.15 percent stake and serves as a non-executive director, ArcelorMittal South Africa has struggled to overcome challenging industry conditions. Global steel production fell by 0.9 percent in 2024, marking a third consecutive year of decline. Domestically, South Africa’s steel demand has dropped nearly 30 percent since 2000, while imports now make up 33.6 percent of the market, further squeezing local producers like ArcelorMittal out of key supply chains.

The financial toll has been severe. The company’s total assets fell by 14.3 percent, dropping to R24.94 billion ($1.34 billion), while total equity dropped nearly 75 percent, reaching just R1.96 billion ($105.57 million). Retained earnings took the hardest hit, plummeting 87.1 percent to R874 million ($47.01 million). With global prices softening, domestic demand shrinking, and a lack of clear policy direction, ArcelorMittal South Africa faces a difficult road ahead as it struggles to navigate a steel market that shows few signs of improvement.