Arcelor Mittal South Africa (Amsa) said talks with the nation’s biggest development finance institution had accelerated, buoying faith in a buyout to save 3,500 jobs in KwaZulu-Natal and Gauteng.
The statement offers some encouragement to the steelworks employees anxiously eyeing the impasse between Amsa and the state, which said earlier this month that it would not abandon the search for a buyer to salvage the operation.
Shares in the struggling steel major jumped 8% to R1.58 on the news, their biggest intraday rise on the JSE in more than two months, but retreated to R1.45 later in the day.
Amsa told shareholders that it was now engaged in “advanced discussions” with the Industrial Development Corporation (IDC) to “find a sustainable solution based on a non-binding term sheet regarding a potential transaction”.
However, it added, “There is no certainty that any transaction will be concluded,” with discussions subject to definitive agreements and approvals.
Three months ago, Amsa rejected the IDC’s R8.5bn offer to take over its long steel division in Newcastle and Vereeniging, according to reports by Bloomberg.
In its bid to defer the closure of the long steel unit, the state-owned group, which holds about 8% of Amsa, has put substantial skin in the game over the past year.
In early February 2025 it forked over a R380m loan, followed by a R1.68bn cheque in April. In March, the government also signed off on more than R400m in wage subsidies for about 12 months.
So far, state intervention has been insufficient to halt the closure, with Amsa CEO Kobus Verster saying in September that the group would begin to wind down its long steel business at the end of that month.
The unit has racked up R1.7bn in cumulative losses since 2023 as electricity tariffs and Chinese competition continue to erode its competitive position.
In its 2024 annual report, the group bemoaned the local steel industry’s “greatest sustained challenge since the events of the financial crisis of 2008/09″.
Still, the ongoing discussions offer a glimmer of hope.
The government’s desperate search for a buyer comes as South Africa is ramping up state intervention in the local steel sector to slow the rising tide of deindustrialisation.
British American Tobacco’s decision to stop producing cigarettes in South Africa as the illicit tobacco trade balloons out of control, putting more than 35,000 jobs at risk, has put the spotlight on the country’s ability to stave off further job losses.
Added to this are thousands of layoffs over the past few years at smelters owned by the Merafe-Glencore joint venture, many of which were suspended last year due largely to unsustainable electricity costs.
The steel sector’s woes have sparked significant policy changes in the past year, with the International Trade Administration Commission of SA (Itac) concluding its most extensive steel policy review in more than 20 years in August.
Earlier this month, trade, industry and competition minister Parks Tau moved to ease antitrust laws by exempting industries “in distress” due to persisting “macroeconomic challenges” from certain sections of the Competition Act.
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