Talks to rescue ArcelorMittal’s struggling South African operations face fresh uncertainty after negotiations with the state-owned Industrial Development Corporation (IDC) stalled over valuation, Bloomberg reports.
The world’s second-largest steelmaker has been weighing the future of its local unit for months.
According to people close to the matter, offers of up to 7 billion rand ($398.6 million) have been tabled, but the company is said to be holding out for more. While discussions remain ongoing, the due diligence period runs until September 30, 2025, leaving little time for a breakthrough.
In response to queries, ArcelorMittal South Africa declined to comment on details, saying only that it was exploring “various strategic options” while the IDC carried out its review.
“The company has been exploring various strategic options while the IDC has simultaneously been conducting its due diligence into the company and the government has been pursuing structural interventions,” the steelmaker said in a notice to the Johannesburg Stock Exchange earlier this week.
Stakes are high
In November 2023, ArcelorMittal first announced plans to close its steel operations, which produce fencing material, rods, bars and rail used in construction and mining.
The company said last July that the final wind-down remains scheduled for September 30, warning that unless a “sustainable solution” is found, operations will cease. Around 3,500 direct and indirect jobs are linked to the business.
The Luxembourg-based group has pointed to rising costs and weak demand from South Africa’s steel-consuming sectors as major constraints.
It reported a half-year headline loss of 1.014 billion rand ($57.7 million) in July, compared with a 1.1 billion rand ($62.6 million) loss a year earlier. Revenue fell 17% to 17 billion rand ($968 million), with sales volumes down 11% to 1.05 million metric tons.
The government has sought to keep the operations alive. In March, the IDC injected 1.68 billion rand to provide short-term relief, but the company has continued to warn of closures.
ArcelorMittal has asked for lower electricity and freight tariffs, as well as new import duties and the removal of a scrap metal export tax, though none of these measures have been implemented.
IDC, which owns 8.2% of ArcelorMittal South Africa, is the company’s second-largest shareholder after the parent group.
Parks Tau, South Africa’s Trade and Industry Minister, recently told lawmakers that the government was in “firefighting mode” to prevent closures, but with time running out, the outcome of talks remains unclear.
The impasse comes at a delicate moment for Africa’s most industrialised economy, already reeling from steep US tariff hikes. Washington’s latest policy imposed a 30% duty on all US-bound goods, including steel — one of South Africa’s key exports.
The central bank has warned that as the tariffs take full effect, as many as 100,000 jobs could be lost across critical industries. With unemployment already at 33%, among the highest in the world, the outlook for the economy has grown even more fragile.
