South Africa’s IDC seeks control of ArcelorMittal SA, linked to Noluthando Gosa

Key Points

• South Africa’s state-owned IDC eyes controlling stake in ArcelorMittal SA to save jobs and key steel mills amid the financial crisis.
• South African government allocates $23 million to keep Amsa’s mills running while reviewing import tariffs and facing industry challenges.
• Businesswoman Noluthando Gosa’s 6.15% stake in Amsa amplifies her role in ongoing IDC negotiations.

South Africa’s state-owned Industrial Development Corporation (IDC) is considering a move to acquire a controlling stake in ArcelorMittal South Africa (ArcelorMittal SA), a Gauteng-based steelmaker linked to prominent businesswoman Noluthando Gosa. The goal is to prevent the closure of two vital steel mills, sources familiar with the matter said.

ArcelorMittal SA, the country’s largest steel producer, has faced growing challenges from rising production costs, cheap imports, and unreliable rail services. These issues have put 3,500 jobs at risk.

The IDC, which currently holds an 8.2 percent stake in the steelmaker, is reportedly willing to inject additional capital in exchange for a larger shareholding, the sources said, speaking on the condition of anonymity due to the private nature of the discussions.

Government intervention in steel sector

The IDC’s move comes as the South African government reviews import tariffs on steel products and allocates R417 million ($23 million) from the state-run Unemployment Insurance Fund to sustain nearly 3,000 employees over the next year.

The funding follows ArcelorMittal SA’s January decision to proceed with long-postponed plans to close steel plants in Newcastle and Vereeniging, which supply essential grades of steel for the automotive, mining, and construction industries. 

ArcelorMittal SA, which mills iron ore rather than using scrap metal like smaller local rivals, has cited surging electricity prices, regulatory hurdles, and a flood of cheap imports as factors making the plants financially unviable.

IDC’s long-term strategy

If the IDC increases its stake, the strategy would likely include a later sale to strategic investors, the sources said. The corporation has previously taken similar action, including its R3.4 billion ($187.2 million) acquisition of Scaw Metals from Anglo American Plc over a decade ago, followed by restructuring and asset sales to industry players. 

Although ArcelorMittal SA has received expressions of interest for its mills and the company itself, none have been deemed credible enough to present to shareholders. The firm has engaged Investec to sell non-core land assets but confirmed that the Newcastle plant is not part of the divestment plans.

Financial strain and bailout talks

ArcelorMittal SA, based in Gauteng, remains a key player in South Africa’s industrial sector, with an annual production capacity of seven million tonnes. The company serves vital industries such as construction, automotive, and manufacturing.

Yet, the steelmaker is facing significant financial challenges. In 2024, it reported an operating loss of R1.1 billion ($58.87 million) from its long steel division, more than double the R600 million ($32.1 million) loss from the previous year.

The company’s headline loss deepened to R5.1 billion ($272.95 million), up from R1.89 billion ($101.15 million) in 2023, highlighting its ongoing financial distress. To stay afloat amid rising costs and limited policy support, ArcelorMittal is seeking a $170.11 million bailout.

Noluthando Gosa, an independent non-executive director at ArcelorMittal SA, holds a 6.15 percent stake in the company, underscoring her role in its future direction. As discussions progress, the Industrial Development Corporation (IDC) may step in with interim funding to keep operations running while considering long-term restructuring options.