Investors appear increasingly confident that drawn-out negotiations with the state-owned development financier are close to finalisation.
The ArcelorMittal South Africa (Amsa) share price has jumped almost 20% in little more than a week as investors bet that protracted negotiations with the Industrial Development Corporation (IDC) may finally produce a rescue deal for the loss-making steelmaker.
The company has issued several Sens notices in recent months confirming that negotiations with the IDC are underway, the latest on 28 August advising that these negotiations are now at an advanced stage to finalise agreement regarding the potential transaction.
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This followed a July cautionary announcement advising that there had been some delays in the anticipated timeline, although the parties were still at an advanced stage in finalising an agreement.
Amsa reported a headline loss of R3.35 billion in 2025, following a R5.1 billion loss the previous year. Net borrowings increased to R7.9 billion by June 2026, from R6.8 billion at the end of 2025.
The financials present a picture of unsustainable losses, not entirely of its own making.
The company has had to battle cheap imports from China – where producers enjoy subsidies and state-regulated tariffs.
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Amsa’s electricity costs have spiralled 835% over the last decade, while those of Chinese competitors have, in many instances, flatlined.
Battling
Despite receiving R2.6 billion in loans from the IDC over the past two years to keep the business afloat, Amsa said it had no option but to wind down its loss-making long-steel operations, including the Newcastle Works.
The IDC commissioned KPMG to conduct a due diligence report.
However, government sees the closure of Amsa’s primary steel plants as a potentially irreversible step in SA’s deindustrialisation.
It has therefore been searching for a solution involving the IDC, together with stronger trade protection against cheap imports.
Read: Will the steel tariff shake-up halt SA’s deindustrialisation?
The recent share-price rise suggests growing investor confidence on the imminence of a deal that will restore some dignity to the balance sheet and preserve some of SA’s primary steelmaking capacity.
Firm hand
Amsa has meanwhile taken a hatchet to costs and focused on operational efficiencies to contain its losses.
Commenting on Amsa’s interim results in July, CEO Kobus Verster said: “Although market conditions remain exceptionally difficult, the business we have today is significantly stronger than it was eighteen months ago.
“The difficult decisions we have taken are beginning to deliver measurable improvements in our underlying performance.”
The company’s priorities were to complete the turnaround, restore sustainable profitability and position Amsa for long-term growth.
The strategy includes reducing costs, improving productivity, optimising energy and logistics expenses, and unlocking value from non-core assets and operations under care and maintenance.
Read: Local steel processors eye stake in Amsa assets
However, the proposed sale of these assets has been put on hold pending the outcome of the IDC transaction.
The share closed at R1.42 on Monday – 14.5% higher over the previous week – and was trading around R1.48 to R1.50 on Wednesday morning.
The prospect of a deal with the IDC has prompted speculation that the Newcastle Works may be revived in the coming months, though this remains unconfirmed.
The exact structure and value of the transaction have not been disclosed.
Previous reports referred to an IDC proposal of about R8.5 billion, much of which would cover loans and interest owed by Amsa to its parent company. That proposal was rejected last year, reportedly because the parties could not agree on valuation.
Listen/read: A country in need of infrastructure, and a steel sector in need of demand …
The latest Sens announcement provides no indication of whether the IDC has increased its offer or whether the parties are considering a different transaction structure.
