Exclusive talks between ArcelorMittal and South Africa’s development finance institution IDC regarding the possible sale of ArcelorMittal South Africa (AMSA) have reportedly ended without a deal. This allows ArcelorMittal to approach other investors for its local operations.
According to Bloomberg, IDC’s informal offer of approximately 8.5 billion rand was considered insufficient by ArcelorMittal. Although the proposal covered AMSA’s debt and interest burden of around 7 billion rand, IDC was reportedly unwilling to increase the offer. Meanwhile, discussions regarding a potential gradual takeover of AMSA are ongoing.
On November 4, AMSA stated to the Johannesburg Stock Exchange: “Discussions to explore alternative solutions are ongoing. Further updates will be shared with the public as appropriate.”
The process began when AMSA announced in November 2023 that it planned to close two mills producing products critical to the automotive and mining sectors. Talks intensified and became exclusive earlier this year after IDC provided a loan to AMSA to prevent these closures.
Among the planned closures, the Newcastle mill has already shut down, and the associated iron ore mine operated by Assmang has also halted production. A suitable offer could allow the Vereeniging mill to continue operations, according to sources.
Recently, limited progress on various issues between the company and the government has signaled a strain in relations. Key topics, including electricity price reductions and government-supported scrap steel price discounts, have not seen significant advancement. AMSA has stated that the limited reduction in scrap discounts is insufficient.
In a statement on scrap discounts, the company noted:
“While intended to support industrial development, this policy continues an approach that has weakened South Africa’s steel sector over the past decade. The country cannot afford policy choices that benefit only a narrow segment while putting the broader sector at risk.”
Meanwhile, AMSA is appealing a Labour Court ruling requiring the reinstatement of thousands of workers dismissed following the Newcastle mill closure. The most recent loan provided by IDC allowed for some stockpiling of steel products to support automakers and other manufacturers.
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