It’s difficult not to sympathise with trade and industry minister Ebrahim Patel on the matter of the winding down of ArcelorMittal SA's steel plant in Saldanha.
Even when the global economy is obsessed with talk of artificial intelligence and the fourth industrial revolution, the reality is that most large economies continue to have some reliance on old-fashioned stuff like steel.
The Saldanha plant was commissioned in 1998 and, on paper, appeared to make the most of several of the country’s key strengths. The decision to build the plant had been taken in 1995 jointly by Iscor, a former state-owned enterprise that had been privatised and listed in 1989, and its single largest shareholder the Industrial Development Corporation (IDC).
In addition to a supportive long-term anchor shareholder in the form of the IDC, the Saldanha plant was going to take advantage of the hugely attractive iron ore deposits in the region, cheap electricity and reasonably good rail services to the nearby port to sell huge amounts of steel into the world market. What could go wrong? Particularly as Iscor actually owned the iron ore deposits.
Well, almost everything seemed to go wrong. Part of it was bad judgment, part was bad luck. Although it has to be said, however much went wrong at Iscor, things did not go as shockingly wrong there as they did at Eskom.
In 2001, Iscor unbundled its mining interests into Kumba Resources, which is now controlled by Anglo American, and also entered into a controversial business agreement with ArcelorMittal. In 2004, ArcelorMittal acquired control of Iscor and changed the name.
Then came the near-collapse of Eskom and the disappearance of cheap electricity, the deterioration of Transnet services and, more recently, the significant weakening of the global economy.
The prospect of the closure of ArcelorMittal SA's most modern plant is grim news for the economy and is a chilling reminder of just how much has gone wrong over the past 20 years. It is sad for SA and sad for Patel.
How much influence will Martin Slabbert have over deals between MAS and PK?
MAS’s board says there are checks and balances in place a
The person who will lead JSE-listed, Eastern-Europe-focused property company MAS Real Estate will come down to a vote about a takeover deal next Wednesday.
MAS is voting next week to decide if it will buy the 20% stake in an investment joint venture it has with development company Prime Kapital (PK), an entity run by entrepreneur Martin Slabbert. In terms of the proposed deal, Slabbert would sell the 20% stake and become CEO of MAS.
Some investors are asking how MAS would avoid conflicts of interest given that Slabbert already runs PK, which sells assets to MAS.
MAS was established in 2008 by Pretoria-based Mertech. Initially it invested in Western Europe but in 2016 it teamed up with Prime Kapital (PK), a company run by Slabbert, the former head and founder of New Europe Property Investments (Nepi), to access burgeoning Eastern Europe.
Founded in the early 2000s, Nepi became the largest owner of malls in Romania. After Slabbert left Nepi he started PK with his partner Victor Semionov.
MAS formed two joint ventures with PK, an investment and a development venture. MAS owned 80% and Prime held 20% of the investment venture. As far as the development business was concerned, MAS owned 40% and Prime 60%.
Prime Kapital was to develop assets and then sell them to MAS, earning fees for Slabbert and Semionov. Earlier in 2019, MAS said it would also buy Eastern European assets from other developers and funds. But so far it has only dealt with Prime Kapital.
But in a surprise move in September, MAS and Prime came up with a new deal which will be voted on next week.
MAS would buy Prime’s 20% of the investment venture and Slabbert would replace Werner Behrens as CEO of MAS.
This means Slabbert would head MAS and its development partner. This has raised some questions about how much influence Slabbert will have over how many deals MAS does with PK.
MAS’s board says there are checks and balances in place and that the board will have to vote on every acquisition, but how will this hold up in practice?
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