[miningmx.com] – THE appointment of Paul O’Flaherty as ArcelorMittal South Africa (AMSA) CEO has an interesting irony about it since many of the challenges he’s likely to face at the steelmaker have their antitheses at Eskom, the power utility from which O’Flaherty resigned in July last year.
At Eskom, O’Flaherty ‘enjoyed’ the support of the South African government in pressing home the advantages of a monopoly; at AMSA he faces the disaffection of the government for his company’s dominance of the domestic steel market.
At Eskom, O’Flaherty was the CFO supporting the CEO whose job it was to try grow the firm’s output whereas at AMSA, O’Flaherty is the boss of a company in a market completely sated with steel and where cost containment is the name of the game.
Cost containment is pretty important at Eskom too. It’s just that it didn’t have much control over many of its input costs and efficiency is still a very new concept to Eskom brought home with real impact only recently following the disappointing 8% tariff increase.
In general, however, O’Flaherty is better suited to the private sector. At Eskom, to be honest, he looked a round peg in a square hole. Governments are [should be] good at setting the rules, providing services and collecting taxes, not running companies for profit. When O’Flaherty spoke of efficiencies at Eskom, I bet some thought he wasn’t being serious; or thought he was speaking a different language.
There are some similarities too for O’Flaherty. AMSA’s dominant shareholder is perhaps as equally autocratic as the public enterprises department that is supposed to so micro-manage affairs at Eskom.
There’s also the public image thing. Eskom has a terrible reputation in the South African psyche for being lumbering and monolithic. From a perception point of view, AMSA is a polluter, craven almost to mishap in its works, and uncompetitive in its pricing.
O’Flaherty follows a strong, fiery personality in Nonkululeko Nyembezi-Heita. He’s a bit more reticent perhaps. His running of the steelmaker will be a fascinating story to watch.
