IDC Eyes R8.5 Billion Bid for ArcelorMittal South Africa Amid Sector Shake-Up

Credit: EUROMETAL

South Africa’s Industrial Development Corporation (IDC) is exploring a potential R8.5 billion ($491 million) acquisition of ArcelorMittal South Africa (Amsa), the country’s largest steel producer. The bid, which includes assuming existing debt, could conclude nearly two years of negotiations involving the IDC, the Department of Trade and Industry, and ArcelorMittal’s global leadership.

If successful, the deal would not only secure control of Amsa but also open the door for international steel firms to enter the market, as IDC plans to bring in strategic partners to manage operations.

Talks intensified following Amsa’s November 2023 announcement to shut down its Newcastle and Vereeniging long-steel mills—facilities vital to South Africa’s automotive and mining sectors. These closures threaten 3,500 direct jobs and impact over 100,000 workers in related supply chains.

The proposed IDC-led transaction would primarily repay a loan extended by ArcelorMittal to its South African unit and include a cash component. IDC, already Amsa’s largest shareholder, signed a six-month due diligence agreement with the company, set to expire today.

Amsa’s shares surged up to 19% following news of the potential deal, marking their highest level since April.

Strategic Assets and Industry Challenges

Beyond the long-steel plants, Amsa operates a flat-steel facility in Vanderbijlpark and holds dormant assets in Pretoria, Saldanha, and a shuttered iron ore mine that may be revived. The company has cited high electricity costs, unreliable rail logistics, cheap imports, and scrap pricing policies as reasons for its operational downsizing.

Several firms have approached IDC with proposals to co-invest or form joint ventures tomanage Amsa’s assets. In a letter dated September 12, IDC confirmed its intent to introduce strategic equity partners if a deal is reached.

Networth Investments CEO Harold Vermaak confirmed his company’s ongoing interest, including a proposal to repay IDC over five years in exchange for a controlling stake—following previous unsuccessful bids.

Amsa, formerly Iscor Ltd., was acquired by Mittal Steel in 2003 and later merged with Arcelor SA in 2006. Despite generating nearly R40 billion in revenue last year, its market value has dropped to R1.5 billion—far below its 2008 peak of R116 billion.