ArcelorMittal South Africa shares climb on promising IDC talks
ArcelorMittal South Africa said it was in advanced talks with the state-owned Industrial Development Corporation (IDC) that could lead to a potential transaction, driving its shares up nearly 10%.
A general view shows ArcelorMittal South Africa in Johannesburg, South Africa. Image credit: Reuters/Sumaya Hisham
The loss-making South African unit of global steelmaking giant ArcelorMittal has been battling weak local demand, high electricity costs, as well as competition from local scrap metal recycling mini-mills and imports from China.
The company mothballed its long-steel plants last year in an effort to stem losses.
ArcelorMittal South Africa said in a statement that its parent company and the IDC "are engaged in advanced discussions to find a sustainable solution based on a non-binding term sheet regarding a potential transaction".
The steelmaker did not disclose details of the proposed transaction, and the IDC was not immediately available to comment.
Bloomberg reported that the IDC, which is ArcelorMittal South Africa's second biggest shareholder with 8.2%, had resumed talks to acquire the business after negotiations stalled last year over valuation.
The IDC has, over the past two years, provided R2.6bn in loans to help ArcelorMittal South Africa stay afloat.