Hunt is on for black ArcelorMittal owner

VANDERBIJLPARK. – Wanted: A black owner with big bucks and endless appetite for financial, environmental, safety, reputational and social responsibility crisis. Must be prepared to travel outside Sandton, not expect 30% profit margins and obey the law.
Must also not be too conspicuous a consumer – authentic patriotism would be highly advantageous, without believing that the colour orange is the new corporate pink.
These issues face any potential investor in the troubled steel giant after announcing last week it was searching for black investors – spearheaded by audit company KPMG.
Although AMSA’s reported value at R5 billion (down from R35 billion a few years ago) is relatively cheap, it has legacy baggage and is in the midst of a fundamental business model restructuring and transformational challenge. Its relations with government remain troubled, the legacy of a breakdown in trust and relations over more than a decade on steel prices – government wanting a “developmental” steel price.
AMSA’s present majority shareholder, billionaire Lakshmi Mittal, has regarded himself as a “price-setter and not a price-taker”, but the power relationship is now reversed with government holding the key to steel sector recovery through key infrastructure projects. One of the wealthiest men on the planet, Lakshmi Mittal has been conspicuous by his almost complete public absence in the local steel industry crisis, although he met with President Jacob Zuma privately earlier this year. AMSA’s environmental compliance record remains controversial and its social responsibility footprint does not match its status as Africa’s largest steel producer.
Yet present CEO Paul O’Flaherty has made huge strides since last year in both transforming the steel giant and leading the charge for protection of South Africa’s domestic steel industry.
His transformation and protection strategy has borne fruit in recent months, with government imposing a 10% import tariff on certain steel products and further tariffs under consideration. O’Flaherty also wants government to declare steel a localised and strategically-designated industry.
“Sentiment due to a range of reputational issues could be key for any new investor – government may still think of establishing another steel competitor and millions need to be spent in rebranding and repositioning the company.
“Although Paul O’Flaherty has made a phenomenal impression over the past year, until ownership and its orange branding changes, AMSA will still be perceived by many as unpatriotic and still mired in the past,” said a steel industry insider.