ArcelorMittal South Africa (AMSA) has entered into an agreement to acquire for ZAR 150 million ($10.3m) the heavy sections mill belonging to Highveld Structural Mill (HSM). The transaction is expected to close by 1 December 2020 subject to certain conditions.
In December 2016 AMSA signed a contract manufacturing agreement (CMA) with an option to buy for the sections mill, formerly owned by Evraz. The unit was revamped and restarted by Highveld’s business rescue practitioners after Evraz Highveld was declared insolvent in 2015. Since its restart AMSA has been supplying HSM with semi-finished product for conversion into sections.
“The restart of the heavy section mill was a positive development for the local steel industry,” AMSA says in a note seen by Kallanish. “Not only did it assist in curbing imports of these products, but it also ensured that there was continued supply of these products to the downstream industry. In addition, the operation of the CMA has had the added benefit of reviving jobs in the struggling steel sector.”
“The structural mill is the only facility of its kind in Africa with the ability to produce structural steel, including material for railway lines,” AMSA continues. With further investment it will be able to produce rail. “This is a unique position to supply markets locally and in the African region,” AMSA adds.
In order for the transaction to take place it must receive approval from South African competition authorities. Moreover, AMSA must obtain an air emissions licence from the relevant governmental authority, and the Industrial Development Corporation must release the security it holds over Highveld’s assets.
AMSA’s steel sales declined -9% on-year in the first half of 2019 to 2.16 million tonnes, with exports down -8% to 1.59mt and domestic sales down -12% to 576,000t (see Kallanish passim).