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S.African electricity regulator supports ArcelorMittal in its bid for discounted rates

ArcelorMittal South Africa has met the requirements for discounted electricity rates, according to the rules set by the energy regulator of the country. The steelmaker, which is in a loss, made the request.

However, the regulator said that it does not have the power to impose an electricity tariff, and ArcelorMittal will have to negotiate favorable terms with Eskom, a state-owned utility. ArcelorMittal has decided to close its South African long-steel operations that are losing money due to high electricity costs and weak demand.

The steelmaker asked the National Energy Regulator of South Africa to review a Eskom decision to reject its request for discounted tariffs.

Eskom claimed that ArcelorMittal didn't meet the criteria of negotiated price agreements (NPAs), typically offered to industrial power users who consume a lot of energy.

"NERSA considers eligibility criteria and other factors

ArcelorMittal South Africa was found to have substantially met the requirements of the NPA framework.

In a press release, the regulator stated that it had "certain criteria".

ArcelorMittal announced this week that it would close its long-stack steel plants in Newcastle and Vereeniging on September 30 as planned, after failing to obtain government concessions regarding utility charges and import duty among other requests.

According to the company, closing the plant could lead to the loss of over 3,500 direct positions.

ArcelorMittal announced that the Industrial Development Corporation of South Africa, a state-owned company with an 8% stake in ArcelorMittal South Africa was performing due diligence on ArcelorMittal.

(source: Reuters)