ArcelorMittal South Africa to buy steel manufacturer, swings into H1 loss
JOHANNESBURG, Aug 1 (Reuters) - ArcelorMittal's South Africa
business has agreed to buy steelmaker Highveld
Structural Mill (HSM) for 300 million rand ($20.9 million), it
said on Thursday, as it seeks to expand its manufacturing
The company, majority-owned by ArcelorMittal, had a
manufacturing agreement with parent company Highveld Steel,
supplying steel products to HSM for processing into heavy
structural steel, and an option to purchase HSM.
"The structural mill is the only facility of its kind in
Africa with the ability to produce structural steel, including
material for railway lines. This is a unique position to supply
markets locally and in the African region," it said in a
ArcelorMittal's South African unit said it will pay 150
million rand in cash and a further 150 million rand after a
payment trigger, which it will fund from new borrowings and
The company reported an interim headline loss of 638 million
rand compared to interim headline earnings of 54 million rand
for the same period last year as reduction in steel consumption
in its home market weighed on profits.
"Locally, the South African steel industry continues to face
significant challenges. The domestic economy has remained close
to recessionary levels as investment and infrastructural
spending in the country remained subdued," the company said.
Last month it said it planned to cut more than 2,000 jobs as
it struggles with cheap imports, rising costs and a flagging
ArcelorMittal South Africa, which has for some time
complained about cheap imports eating into its business, said
ongoing challenges in the steel industry as well as a weak South
African economy had hit its performance.
($1 = 14.3667 rand)
(Reporting by Tanisha Heiberg; editing by David Evans)
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