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The Competition Tribunal has unconditionally approved a large merger that will see ArcelorMittal SA acquire the steel and rail manufacturing business of Highveld Structural Mill, the Tribunal said in a statement on Wednesday.
HSM, a subsidiary of Evraz Highveld Steel & Vanadium, is the only producer of "heavy sections of long steel" in the country, according to the Tribunal. It went into business rescue in 2015 and ceased production.
In 2017, however, it reinstated production of the heavy sections.
ArcelorMittal, the largest steel company in Africa, announced the R300 million purchase in August 2019, as it sought to expand its manufacturing capabilities. The company supplies some 60% of the steel used in South Africa.
According to the Tribunal, the Competition Commission found that there would be no anti-competitive effects arising from the merger – rather, it would potentially be in the public interest.
South African steel consumption hit a decade low last year, which severely impacted ArcelorMittal. In the six months to end-June, its revenue declined by 5% due to lower sales volumes, while it suffered a headline loss of R638 million with net debt growing to R1.7 billion from R500 million six months earlier.
More recently, it said it had finalised a "large-scale employee reorganisation" announced in July 2019, which resulted in some 1 000 job cuts.
It reported a a loss of R4.68bn for the year ended December 2019 as the "downturn in world steel" deepened, with a 9% drop in revenue to R41.4bn as sales volumes reduced by 8%, Fin24 reported.
It added that the shutdown of its Saldanha Works was expected to be concluded towards the end of the first quarter of 2020.
* Compiled by Marelise van der Merwe
