According to a report published by Bloomberg, a group of South African steel processors has approached the state-owned Industrial Development Corporation with a proposal aimed at helping take control of the struggling local unit of global steelmaker ArcelorMittal, ArcelorMittal South Africa (AMSA).
The proposal was submitted to the IDC by an industry group comprising six members, including labor unions and local steel processor Allied Steelrode (Pty) Ltd., according to sources cited in the report. The discussions are private and ongoing.
Mill closures and IDC involvement
The IDC has been engaged in discussions with ArcelorMittal since November 2023, when the global steel group announced plans to shut two steel mills at AMSA. The affected facilities produce steel grades that are considered important for South Africa’s automotive and mining industries.
The IDC is the second-largest shareholder in AMSA, holding approximately eight percent of the company. It has previously provided loans to the steelmaker and has indicated its intention to increase its stake in order to preserve the country’s industrial manufacturing capacity.
Proposed structure under consideration
Under the arrangement, the IDC would provide financing and increase its equity stake in AMSA. ArcelorMittal could retain a shareholding for a limited period under the proposed structure.
Discussions between the IDC and ArcelorMittal reportedly broke down late last year after the steelmaker rejected an informal proposal valued at approximately ZAR 8.5 billion ($531 million), as previously reported by SteelOrbis. The proposal would have included repayment of ZAR 7 billion in debt owed to the South African unit’s parent company. The assets are also expected to be revalued as part of any potential transaction.
