South Africa's Industrial Development Corporation (IDC) has resumed negotiations to acquire the local operations of global steel giant ArcelorMittal after failing to attract other buyers. The state-owned development finance institution is preparing to submit a non-binding offer for the business.
The renewed talks follow a breakdown in discussions late last year, when ArcelorMittal rejected an informal proposal worth approximately R8.5 billion, which included the repayment of R7 billion in debt owed by its South African unit to its parent company. The initial talks began in November 2023, when ArcelorMittal South Africa (AMSA) announced plans to shut down two key steel mills.
News of the revived negotiations sparked a sharp rally in AMSA's share price, which surged as much as 11% on Thursday to reach its highest level since November. The IDC, which already holds an 8% stake in AMSA, previously provided a loan to prevent the immediate closure of the facilities. Despite this intervention, AMSA has since closed the two mills and an associated iron-ore mine, though it continues to operate a major mill in Vanderbijlpark.
An IDC spokesperson confirmed ongoing engagement with AMSA, ArcelorMittal, and government departments "to find a sustainable solution to challenges facing the company."
Market sentiment is cautiously optimistic, but it is also laden with execution risk. The share price surge reflects relief at the prospect of a state-backed rescue, which could preserve industrial capacity and jobs. Investors are interpreting the IDC's renewed interest as a signal that a catastrophic liquidation may be avoided. However, sentiment remains tempered by the history of failed negotiations, the ongoing operational challenges at AMSA, and the significant capital required to revive idled facilities. A successful acquisition would likely be viewed as positive for South Africa's broader industrial sector and mining supply chain, but the financial viability of the deal and the long-term competitiveness of the assets under state-linked ownership are key concerns for investors. The market will closely watch the terms of any formal offer and the subsequent funding plan.
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