A significant transformation attempt in South Africa's steel industry has hit a roadblock as ArcelorMittal South Africa has declined a R19 billion buyout proposal from Networth Investments. The ambitious bid, which aimed to revolutionize the country's struggling steel sector through green technology implementation and enhanced stainless steel production, was dismissed as insufficient by the steel giant.
Networth Investments, led by CEO Harold Vermaak, had proposed acquiring ArcelorMittal Group's dominant 60% shareholding in Amsa, along with an additional 2% held by various foreign investors. The proposed leveraged buyout was designed to transform the traditional steel manufacturer into a modern, environmentally conscious operation focusing on high-value products.
The transformation strategy presented by Networth Investments centered on a gradual shift away from low-value steel products toward more profitable stainless steel production. Vermaak pointed to Columbus Stainless as a successful example of profitable steel production within South Africa, demonstrating the potential viability of their proposed business model.
The financing structure for this ambitious transformation included vendor finance agreements with established European steel industry players. Specifically, Networth had secured potential partnerships with an Italian steel company for long products and a German firm interested in reopening Amsa's Saldanha Steel plant, which ceased operations in 2020 due to economic viability concerns.
ArcelorMittal's response to the proposal was decisive, with a company spokesperson stating that the correspondence received from Networth Investments failed to constitute a firm or legitimate offer. This assessment effectively halted any further consideration of the proposed transformation plan, despite its potential implications for South Africa's industrial sector.
