AMSA acquires South Africa’s only producer of heavy sections of long steel

The Competition Tribunal has unconditionally approved steel manufacturer ArcelorMittal South Africa’s (AMSA’s) acquisition of the manufacturing and production of the structural steel and rail business of Highveld Structural Mill (HSM), a subsidiary of Evraz Highveld Steel and Vanadium.

HSM, in eMalahleni, Mpumalanga, is the only company capable of producing heavy sections of long steel in South Africa.

Evraz Highveld, along with HSM, went into business rescue in April 2015 and ceased production owing to weakened global markets and reduced domestic steel demand, besides other factors.

However, HSM resumed operations in 2017 after it and AMSA concluded a contract manufacturing agreement for HSM to process blooms and slabs supplied by AMSA into heavy structural steel.

AMSA announced in April last year that it planned to buy HSM for an initial R150 million, plus a possible further R150 million, conditional upon it securing a long-term offtake agreement for supplying the mainline rail industry.

At the time, AMSA said the acquisition would ensure the country retained a regionally strategic steel-manufacturing capability.

The Competition Commission’s assessment of the proposed acquisition had determined that there would be no anticompetitive effects and it recommended that the tribunal approve the transaction.

The asset includes a state-of-the-art smelter plant capable of profitably producing a range of products including pig iron, ferro alloys and valuable slag by-products from fines.

The smelter plant boasts three modern open slag bath furnaces, as well as 10 pre-reduction or preheating kilns. There is significant flexibility in operation as it is possible to spilt the plant into different product streams. With an estimated ramp-up to full production in approximately 12 to16 weeks, the lead time to market is significantly reduced when compared to the construction of a similar sized smelter plant.

The Iron Plant is situated in the ideal location in the heartland of South Africa’s mining and power producing hub and is also linked to national roads and highways, including the N4. The industrial park also owns a private rail siding linked to the major rail networks.