Johannesburg - ArcelorMittal SA (Amsa) plans a R2.3bn deal that involves a former deputy finance minister as the continent’s biggest steelmaker seeks to meet the government’s objectives of boosting the participation of black people in the economy.
Amsa, as the Vanderbijlpark-based unit of ArcelorMittal is known, will issue a 17% shareholding to a specially formed black-owned company, Likamva Resources, the steelmaker said in a statement on Wednesday.
Its founders include ex-Deputy Finance Minister Jabu Moleketi, former Amsa spokesperson Themba Hlengani and Leslie Maasdorp, a former chief executive officer of education company Advtech and current vice president of the Brics New Development Bank.
Likamva has 24 months to find communities for the deal and allocate "an effective interest of 5%" in Amsa to broad-based parties, it said, which would leave Likamva itself with 12% of the steel producer’s stock.
Besides the founders, its other shareholders include "individuals and companies involved in the engineering, construction, energy, environmental and automotive sectors," it said.
Amsa said in May it would limit job cuts, invest in steel supply and increase black ownership in return for South Africa imposing anti-dumping duties on cheap Chinese imports.
The black economic empowerment regulations require companies to obtain shareholding by those excluded from the economy under the apartheid, which ended in 1994.
The producer’s previous attempt at a deal was cancelled in 2011 after unions, investors and the main opposition party condemned it for including a son of President Jacob Zuma.
"Amsa is committed to providing meaningful opportunities for historically disadvantaged persons to enter and benefit from the South African steel industry," the company said on Wednesday.
It also created a new employee-ownership programme that will be allocated new shares representing 5.1% of the company.
Likamva has committed to introduce a so-called broad-based group, which will include social and community-development organisations in areas where Amsa has operations, as a shareholder within the company created for the purpose of the deal within 24 months, Amsa said.
The new black empowerment and employee shareholders will be restricted from selling their stock for 10 years.
Amsa, which employed almost 10 000 people in the country at the end of 2015, has struggled to restore profit because of a surge in Chinese imports at prices as much as a quarter below local production costs.
The company said in July it may return to profit for the first time since 2010 after South Africa’s government introduced duties on steel imports at Amsa’s request.
Amsa said last month it will pay a R1.5bn fine after admitting to being involved in cartels in long steel and scrap metal following an investigation by South Africa’s Competition Commission.