Government pushes for Arcelormittal South Africa business sell-off amid R1.2bn bailout

Banele Ginidza

The Minister of Trade, Industry and Competition (the dtic), Parks Tau, said on Tuesday that the government was pushing for the sale of components of Arcelormittal South Africa (Amsa) business to identified buyers following a substantial R1.2 billion bailout from the Industrial Development Corporation (IDC).

Answering an onslaught of questions from members of the portfolio committee on trade and industry in Parliament, Tau explained the scenario facing the automotive sector, which has expressed concerns over Amsa's troubles. 

Tau said the automotive sector had individually and through the Automotive Business Council (Naamsa) indicated that with Amsa doing defunct, the industry would have to follow suit as importing long steel would not be viable.

"We can't as a department, even the IDC as a minority shareholder with 8.2% shareholding, go out to the market and say the company is for sale. It is inappropriate and illegal," Tau said.

"We have asked Amsa to test the market appetite for the whole of the company or different components. Sometimes people have different technologies for different parts. At this point, our intervention is to share the information."

Despite his recent absence from deliberations over the past two weeks, Tau reassured members that discussions regarding potential sales were ongoing, though no clear announcements can yet be made regarding the path forward for Amsa.

In a bid to facilitate the possible divestment of non-core land assets, investment advisors Investec have been enlisted, even as State efforts remain focused on preserving the long steel business, notably ruling out the sale of the pivotal long steel plant in Newcastle.

Tau said the option of building separate capacity for long steel products was also ruled out as the required period ranged between 18 to 24 months, which would have still crippled the automotive and other Amsa main clientele.

In its briefing on the implementation of the Steel and Metal Fabrication Masterplan, the dtic said there has been a loss of 2 290 jobs from September to December 2024.

It said the Organisation for Economic Co-operation and Development (OECD’s) Clean Energy Finance and Investment Mobilisation (CEFIM) programme was finalising its South Africa Steel Decarbonisation pathways report based on an economic assessment of three selected low carbon technologies related to carbon capture, storage and use.

"UNIDO (United Nations Industrial Development Organisation) as part of its Mitigation Action Facility (MAF) is finalising a €25 million fund to be managed by the IDC for the next five years to accelerate steel decarbonisation," said director general Simphiwe Hamilton, adding that a pipeline of projects from interested primary mills is being developed by the IDC.

"The second round of assessments has been successful with SA being one of 7 countries selected to progress to the detailed feasibility phase."

Addressing broader industry impacts, the Steel and Metal Fabrication Masterplan, which is in motion, anticipates active involvement in transmission development following the National Transmission Company of South Africa’s (NTCSA) recent agreements with 19 local firms, valued at approximately R32 billion over eight years. 

"The process to be appointed to the EPC panel will be opened to the market annually around July each year, to enable other companies to participate. It is a move that reaffirms the country's commitment to improving its transmission grid capacity," Hamilton said.

"This collaboration between the public and private sectors, was also through the efforts of the working group on the transmission development plan." 

The anticipated rise in demand for tower steel and line construction presents an additional avenue for local steel manufacturers, projecting a requirement for approximately 452 175 tons of steel over the next decade. 

"This would amount to about 3 800 tons per month when smoothed out over 120 months;well within the capacity of local manufacturers," he said.

"The steel product demand mix for local transmission towers is approximately 90% light, medium and heavy sections and 10% plate products. Minimills are capable ofsupplying some components; excluding the heavy sections." 

BUSINESS REPORT