ArcelorMittal South Africa (SA) said this Thursday 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%.
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 SA said in a statement 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 on Wednesday reported that the IDC, which is ArcelorMittal SA’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 R2.6 billion ($160.79 million) in loans to help ArcelorMittal SA stay afloat.
–Reuters–
