Johannesburg - ArcelorMittal South Africa will issue shares representing a 17-percent holding to a group of black investors as the continent’s biggest steel-maker seeks to meet the government’s objectives of boosting the participation of black people in the economy.
AMSA, as the Vanderbijlpark, South Africa-based unit of ArcelorMittal is known, will issue the shares to a specially formed company, black-owned, called Likamva Resources, the steel-maker said in a statement on Wednesday. It also created a new employee-ownership programme that will be allocated new shares representing 5.1 percent of the company.
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 nation’s empowerment regulations require companies to obtain shareholding by those excluded from the economy under the apartheid, or whites-only rule, that ended in 1994.
“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.
Likamva has committed to introduce a so-called broad-based group as a shareholder within the company created for the purpose of the deal within 24 months, AMSA said. The additional holders, which will include social and community-development organisations in areas where AMSA has operations, will have an indirect 5 percent of the steelmaker. The new black-empowerment and employee shareholders will be restricted from selling their holdings 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 R1.5 billion ($111 million) fine after admitting to being involved in cartels in long steel and scrap metal following an investigation by South Africa’s Competition Commission.
BLOOMBERG