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AMSA shareholders back R2.2bn empowerment deal

Shareholders in ArcelorMittal South Africa(AMSA) voted on Friday in favour of a R2.2-billion broad-based black economic empowerment transaction, involving Likamva Resources. The approval was carried by 99.9% of the shares that were eligible to vote.

The deal will see Likamva initially hold a 17% stake in AMSA through notionally funded shares, issued by ArcelorMittal South Africa to the value of R1.75-billion.

Likamva, which is led by former National Planning Commission member Noluthando Gosa, is required, within 24 months, to introduce broad-based participants, drawn primarily from the communities in which AMSA’s operations are located. Thereafter, Likamva’s shareholding will be reduced to 12% and the broad-based participants will hold 5%.

In addition, a newly established AMSA Employee Empowerment Share Trust will acquire a 5.1% shareholding in the company through notionally funded shares valued at about R525-million. The new employee share scheme is in addition to the existing Ikageng Employee Share Option Scheme, introduced in 2015.

AMSA CEO Wim de Klerk said the transaction would help advance the group’s transformation objectives, while the inclusion of employee community shareholders would help make the transaction “broad-based and inclusive”.

Separately, the Competition Tribunal confirmed a settlement agreement between AMSA and the Competition Commission, in which the company agreed to pay a R1.5-billion fine for its participation in long-steel and scrap-metal cartels.

As part of the settlement, AMSA also agreed to a pricing remedy to address competition concerns relating to its pricing policy. In this regard, AMSA undertook that, for five years, it would limit its earnings before interest and tax margin to a cap of 10% for flat-steel products sold in South Africa.

In addition, AMSA committed to a R4.6-billion capital expenditure over the same period.

The tribunal approved the settlement subject to the inclusion of a new undertaking not included in the commissions’ settlement. Under the revised terms, AMSA agreed “to engage in any future exchange with government departments and interested stakeholders regarding the promotion of steelimports, including risks of antidumping duties on such exports, in an open and transparent manner, subject always to compliance with the Competition Act”.

The two developments came in the same week, though, that AMSA announced that it would be raising both flat- and long-steel prices by between 4.3% and 10.2% from December 1.

The company justified the increases on the basis of international steel market movements, rising input costs and the need to address ongoing losses at its Vanderbijlpark Works. 


Source: Mining Weekly