JANUARY 16, 2004
UK -based Indian steel magnate Lakshmi Mittal is believed to have embarked
on a new initiative to gain total control of the South African steel
industry. Mittals LNM group is making a direct bid for South Africas
second largest steel producer, Highveld Steel and Vanadium Corp. The
authorities may take some time to approve LNMs request for control
of Iscor, which it turned around to financial viability after it entered
into a Business Assistance Agreement (BAA) with Iscor two years ago.
Mittal's LNM already holds a 49.9 percent stake in the countrys
largest steel producer, the former state-owned Iscor. Mittal is awaiting
clearance from South Africas Competitions Board to allow him to
take full control of Iscor. LNM has gradually acquired additional shares
in Iscor as part of the BAA for effecting savings by providing improved
technologies
The move to acquire Highveld Steel now might be aimed at avoiding the
long delay that may be caused by the required approval for Iscor. The
current attempt to acquire Highveld Steel would also not require LNM
to get approval from Iscor shareholders.
LNM has huge international steel interests, providing Iscor and others
with access to wider markets. LNM might also be more able than
Iscor to supply the capital expenditure which Highveld will require
in future, although there will also be the need to rationalise production
at Highveld.