Investors have expressed interest to purchase embattled steel producer ArcelorMittal SA (Amsa), trade, industry & competition minister Parks Tau told MPs on Tuesday.
Tau led a team of departmental officials to brief parliament’s trade, industry & competition portfolio committee on the implementation of the steel industry master plan and the state of the industry.
Tau said that JSE-listed Amsa had indicated it was engaging with entities about a possible sale but cautioned that it had not reached a stage in which announcements could be made.
“I can assure members that the processes are ongoing with regard to maintaining capacity in the country and increasing our competitiveness,” the minister said.
The government, through the Industrial Development Corporation (IDC), has loaned R1.68bn to Amsa to save its long steel plants in Newcastle and Vereeniging that were threatened with closure and would have severely affected downstream value chains.
Tau said the department had indicated to Amsa that it needed to test the market’s appetite for the whole or part of the business to determine whether there was any interest.
It would be “both inappropriate and illegal” for the IDC as a minority shareholder with a 8.2% stake in the company to tell the market the company was for sale.
In terms of the job saving agreement with the government on the basis of the IDC’s loan to ease Amsa’s immediate cash flow pressures, Amsa deferred closure of its Newcastle long steel plant until August and committed to continue operations under a recovery plan jointly developed with the government and industry. During this deferral period the government undertook to urgently address the structural problems in the industry.
Tau said state support for Amsa was a short-term measure to prevent supply chain disruptions to downstream industries which relied on its products but there was a need to find a long-term solution through consultation with stakeholders.
It would also be necessary to work on a possible transition plan if Amsa closed down.
MPs were keen to find out what kind of dividends the now state-assisted Amsa had paid to its shareholders over the years, to which Tau replied that his department had looked at this and according to his information it had not paid dividends for some time.
Tau referred to the global problems faced by the steel industry prompted by a decline in Chinese construction that had created an oversupply, which was exported cheaply. This had been worsened by US President Donald Trump’s tariff measures on steel imports.
The minister said the department was “far down the line” in finalising the government’s industrial policy and implementation plan which was needed urgently. Sector and industry-specific issues would be addressed in the various master plans.
The department’s chief director of industrial procurement and development, Tebogo Makube, gave an overview of the steel industry and the achievements of the steel industry master plan, which envisaged increased local demand, increased exports to Africa, import tariffs and rebates, and safeguard and antidumping duties among other things.
He said the slump in domestic steel demand could be turned around by the planned investment in infrastructure. Finance minister Enoch Godongwana indicated in the rejected 2025 budget that R1-trillion would be spent on infrastructure over the next three years. Transnet Freight Rail and the Passenger Rail Agency of SA had important infrastructure plans.
The International Trade Administration Commission (Itac) has launched a comprehensive review of steel tariffs. Itac chief commissioner Ayabonga Cawe said Itac strived to balance steel tariffs with rebates for steel products not produced in SA. Itac was looking at the preferential pricing system for steel.
MPs were told that the department was planning a decarbonisation fund for the steel industry managed by the IDC and funded by a €25m grant from the UN Industrial Development Organisation.
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