ArcelorMittal’s local subsidiary, ArcelorMittal South Africa Ltd (AMSA), said in a statement to the stock exchange on Thursday: “ArcelorMittal and the Industrial Development Corporation are engaged in advanced discussions to reach a sustainable solution based on a non-binding preliminary agreement regarding a potential transaction.” Bloomberg had previously reported that the talks had resumed.
Late last year, negotiations between the parties ended without an agreement after ArcelorMittal rejected an informal offer of approximately ZAR 8.5 billion (USD 2.11 billion), which included repayment of ZAR 7 billion owed by its South African unit to its parent company. According to a source familiar with the matter, the Industrial Development Corporation of South Africa (IDC) is likely to acquire the unit gradually, making a series of payments to continue benefiting from ArcelorMittal’s expertise for some time. AMSA declined to comment beyond its official statement.
A source, who requested anonymity, said that talks between South African government representatives and ArcelorMittal took place during breaks at the World Economic Forum in Davos, Switzerland. Both this source and another person involved in the discussions declined to disclose details of what was offered to ArcelorMittal.
AMSA shares rose as much as 12%, reaching ZAR 1.58 their highest level since November in Johannesburg trading.
Discussions among ArcelorMittal, the IDC, and South Africa’s Department of Trade, Industry and Competition began in November 2023, after AMSA announced plans to shut down two steel plants that produce steel grades critical to the country’s vital automotive and mining sectors. These talks took on a more urgent tone last year when the IDC—which owns approximately 8% of AMSA extended a loan to the steelmaker to prevent the plants’ closure.
AMSA has since closed two steel plants and an iron ore mine. It continues operating a facility in Vanderbijlpark, south of Johannesburg, which produces steel sheet and other products, while keeping its plants in the capital Pretoria and the coastal town of Saldanha idle. The IDC considers these facilities vital to the nation’s industrial sector.
Formerly known as Iscor, AMSA was acquired in 2003 by Indian billionaire Lakshmi Mittal, who merged his company with Arcelor in 2006 to form ArcelorMittal.
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