ArcelorMittal paves way for BEE

ArcelorMittal SA’s application for a 10% bound rate on all imported steel products and agreed to the designation of local steel products for state procurement and infrastructure projects.

For the purpose of the transaction, ArcelorMittal SA will create a special purpose vehicle where the 17% stake to be issued to Likamva will be held. Likamva will acquire the stake, valued at R1.75bn, through a loan funded by ArcelorMittal SA. The shares will be subject to a 10-year lock-in period and will not be tradeable in that time.

The wholly owned black consortium, whose founders include a broad spectrum of business leaders, will then, within two years, issue 5% of its holding in the local steel maker to a community trust as part of the consortium’s own commitments to transformation. Beneficiaries of the community trust will come from areas in which ArcelorMittal SA has major operations, such as Vanderbijlpark and Vereeniging.

“This is not just about ArcelorMittal SA, but about the transformation and revitalisation of the entire steel industry,” said Leslie Maasdorp, vicepresident of Brics’s New Development Bank.

Maasdorp is a founding partner in the black consortium. Another prominent member is Jabu Moleketi, chairman of investment group Brait and the Development Bank of Southern Africa.

Maasdorp said Likamva would play an active role in creating value in the domestic steel maker, pursuing opportunities in new markets, expanding current operations on the continent and engaging in supplier development.

ArcelorMittal SA chairman Mpho Makwana said that together with its BEE partners, the group planned to map out where and how growth would be pursued to add value for shareholders.

“We are working on an Africa growth strategy. I am certain there are other opportunities we are missing in the rest of southern Africa,” he said.

The local unit sells the bulk of its steel products in SA and exports the remainder to the rest of Africa and countries in the Middle East.

The empowerment deal will also include an employee scheme for the 9,081 permanent employees of ArcelorMittal SA. The employee empowerment share trust will allocate a 5.1% stake in ArcelorMittal SA to workers of all colours including management. But 60% of the trust would go to historically disadvantaged black employees.

The employee shares will be locked in for a 10year period, during which time they will not be able to be traded.