Industry group from South Africa seeks to join control of ArcelorMittal South Africa

South African steel processors have approached the state-owned Industrial Development Corp. (IDC) with a proposal to help take control of ArcelorMittal South Africa (AMSA), Bloomberg reports, citing sources.

The proposal came from an industry group of six members, including trade unions and local processor Allied Steelrode.

IDC has been in talks with ArcelorMittal since November 2023, when the company announced plans to close two of its division’s plants that produce long products and are crucial to South African industries such as mining and automotive manufacturing.

Industrial Development Corp. is AMSA’s second-largest shareholder, has provided the latter with a loan, and is seeking to increase its stake from the current 8%. The group that made the offer is seen as a strategic equity partner that will help strengthen local ownership of production capacity, sources say.

Under the terms of the agreement, IDC will provide financing and increase its stake, while ArcelorMittal will be able to retain its stake for a limited period.

According to insiders, the process of selecting a strategic equity partner (SEP) for partial financing and overall management of operations on behalf of IDC is being conducted by Nedbank Group. The latter is compiling a shortlist, with Allied Steelrode considered a serious contender.

AMSA has now closed two steel mills and a mine in the country. The company still operates a plant in Vanderbijlpark, which produces steel sheets and other products, and has idle capacity in two other cities.

Last fall, South African Federation of Trade Unions (SAFTU) General Secretary Zwelinzima Wavi said the South African government should “renationalize” AMSA to prevent job losses and revive the country’s struggling industry.