South African Industrial Development Corp. IDC has engaged financial consultants to evaluate the acquisition of assets of ArcelorMittal South Africa Ltd. for 8.5 billion rand ($491 million). This is reported in a press release from IDC.
If approved by regulatory authorities, the deal will end two years of negotiations on the division of the largest steel company ArcelorMittal S.A. In addition, the deal may facilitate the entry of other international steel companies into the market, as IDC intends to seek strategic investors to manage the plants, including Networth Investments Ltd.
In 2023, ArcelorMittal South Africa Ltd. (Amsa) announced the planned closure of two steel mills, which are crucial for the automotive and mining industries in South Africa. The enterprises in Newcastle and Vereeniging employ 3.5 thousand employees and 100 thousand suppliers. In addition, Amsa owns a rolled steel plant in Vanderbilt Park (south of Johannesburg) and idle plants in Pretoria and Saldanha, as well as a closed iron ore mine.
The decision to close steel mills is attributed to high electricity prices, unstable rail links, cheap imports, and government policies that provide local competitors with discounts on raw materials.
IDC is ready to finance the transaction, including repayment of the loan provided by ArcelorMittal to the South African division, and a certain amount of cash. Earlier, IDC, as the majority shareholder of Amsa, signed a six-month agreement to conduct due diligence until October 1, 2025. Several potential investors approached IDC with a proposal to jointly invest in all enterprises or create joint ventures to manage some plants.
ArcelorMittal is the largest metallurgical and mining company with headquarters in Luxembourg. The company specializes in the extraction of raw materials, the production of steel and the manufacture of various types of metal products for construction, automotive, energy and other industries. ArcelorMittal owns manufacturing facilities in 18 countries and sells products in 160 countries. The company was founded as part of the merger of Luxembourg-based Arcelor and India's Mittal Steel.
Industrial Development Corp. — a government financial institution that provides financing to various industries. The Corporation offers anti-crisis financing, energy financing, and partnership programs for companies in the automotive, chemical, infrastructure, mechanical engineering, and other sectors. The headquarters is located in Sandton (South Africa).
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