Mittal Steel ænot selling flagship subsidiary in S
Mittal Steel ænot selling flagship subsidiary in SAÆ
Carli Lourens
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Trade and Industry Editor
MITTAL Steel, the worldÆs largest steel maker, shot down unconfirmed media reports yesterday that it would sell its 50,01% stake in Mittal Steel SA as part of its $33bn deal to merge with Arcelor.
ôIt couldnÆt be further from the truth,ö said the groupÆs global communications manager, Paul Weigh.
Analysts in SA had been left befuddled by the reports. Mittal Steel SAÆs share price remained virtually unchanged as the market struggled to understand why the global steel maker, led by Lakshmi Mittal, would sell off one of its most profitable operations.
In its annual report released last week, the Mittal Steel group described its South African operations as one of the most competitive steel-making operations in the world, and as an operation situated in a high-growth area.
The rumours stem from a news agency report on Friday that said: ôOn the industrial level, Mittal Steel would divest activities in Algeria, Serbia and SA, along with others in North Americaö.
The unattributed comment was contained in a report based on an article published in French daily La Tribune on the Mittal-Arcelor merger.
Weigh said in a statement yesterday that Mittal Steel SA was ôa flagship subsidiaryö, and that the global group remained committed to SA.
Mittal Steel SA is spending about R10bn upgrading and expanding its production capacity by 2-million tons a year. Its production capacity is about 7-million tons a year.
Warwick Lucas, of Imara SP Reid, referred to the rumour as a ôcurious turn of eventsö.
He said, however, that it might be that the global steel group might well be getting rid of an operation that had become more of an irritation than an asset.
He was referring to the allegations of excessive pricing that gold miners Harmony and DRDGOLD, among other steel users, had brought against Mittal Steel. South African competition authorities are still investigating the allegations.
Mittal Steel SAÆs negotiations over lower steel prices with government were also dragging on.
Several analysts named Indian conglomerate Tata as the most likely buyer if Mittal were to sell the company. They said there would be substantial interest in the company if it were put up for sale.
Its cost-plus iron-ore supply arrangement with Kumba would be a much sought-after advantage, said an unnamed analyst.
Meanwhile, the Mittal groupÆs ambitions to take over world number two Arcelor took a step forward on Sunday when the Arcelor board accepted its latest revised offer.
Lakshmi Mittal (pictured) said at a press conference in London yesterday that the merged entity, Arcelor Mittal, would be the undisputed sector leader. It would be a global giant with a footprint in every major region of the world.
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