South Africa’s Competition Tribunal approved the merger of ArcelorMittal South Africa and Highveld Structural Mill (HSM) on Wednesday, Feb 12. ArcelorMittal SA had exercised the option to purchase the business of HSM as part of a contract manufacturing agreement with Evraz Highveld Steel, which is placed under business rescue plan.
HSM is a subsidiary of Russia-based Evraz Group. Evraz Highveld Steel and Vanadium is the only producers of heavy section of long steel in South Africa. HSM ceased production in 2015 when it went into business rescue as it was facing financial difficulties. In 2017, the company restarted production of the heavy sections following a long-term contract with ArcelorMittal to toll manufacture long steel and rail products. HSM is equipped to produce rails up to a mass of 57kg/m and up to 24m in length.
ArcelorMittal had announced in August 2019 that it had agreed to buy HSM for ZAR300mn (approximately $20mn) as it sought to expand its manufacturing capabilities. The company supplies some 60pc of the steel used in South Africa. South African steel consumption was the lowest in a decade in 2019, which severely impacted ArcelorMittal. Arcelor stated that the structural mill is the only facility of its kind in Africa that has the ability to produce structural steel, including material for railway lines which is a unique position to supply markets locally and in the African region.