Johannesburg - The delisting of Highveld Steel & Vanadium seems imminent now that the joint buyout of diamond company De Beers has been put to bed by Anglo American, the steel producer's controlling shareholder.
The delisting has been on the cards for about two years. However, London mining analysts said last week's announcement that Anglo American, BHP Billiton and the Industrial Development Corporation planned to sell their joint 64 percent stake in Columbus Stainless to Acerinox, a Spanish stainless steel company, was an indication that Anglo was moving in the direction of its rival BHP Billiton, which wanted to exit the steel business.
The deal with Acerinox would see the three companies lower their exposure to the loss-making Columbus Stainless in exchange for 8,8 percent of the Spanish steelmaker.
Albert Minassian of HSBC in London said it was reasonable to say that steel was "no longer sexy" for global mining leaders.
"The Columbus deal may be the first indication that Anglo may be divesting from steel. The group has said in the past that it could take out the minorities in Highveld and delist the company."
An offer to minorities would cost Anglo in the region of R336 million but Minassian said a merger between Highveld and Iscor appeared remote.
Despite the enthusiasm over a proposed merger between the two, such a deal would leave local consumers with only one supplier and was therefore likely to be rejected by the Competition Commission.
Minassian said even the argument that the merger would help South Africa compete internationally was unlikely to hold any ground with the commission after it rejected a similarly motivated deal between Sasol and AECI.
Instead, he suggested that Anglo could also bundle all its steel assets into one vehicle with a view to spinning it off down the line.
Besides its 77 percent holding in Highveld, Anglo has a 40 percent stake in Samancor and full ownership of Score Metals.
Bundling the three into what could effectively become AngloSteel, would make the steel assets more attractive, particularly to international buyers.
Peter Davies, SG Securities' mining analyst, said if Anglo decided to merge Highveld with Iscor's steel assets, it would only be putting the asset into another vehicle that would be up for sale.
Whatever the case, Highveld was seen as poised to play a part in a much-needed rationalisation of the steel industry.
The steel producer was scheduled to release its interim results next month, when analysts were hoping to get more clarity of its future plans. Luigi Matteucci, the financial director of Highveld, said the company was taking one step at a time.
He said that Iscor's plans to split the company into separate steel and mining companies had to take place before a merger could be considered.
Highveld shares closed almost 1,5 percent lower at R14,60 yesterday while Iscor shares climbed more than 3 percent, closing at R25,80.