South Africa's largest steel producer ArcelorMittal South Africa would not participate in a bid for Anglo American's steel unit, Scaw Metals, unless the mining giant decided to sell the company's assets off piecemeal.

Anglo announced that Scaw was no longer core to its business in October last year, adding that it would seek to dispose of it, along with Tarmac, Copebrás, Catalão and its portfolio of zinc assets.

However, it has refused to provide further details to Engineering News Online about how it intended running the Scaw disposal process, or whether it had received expressions of interest.

Anglo's media relations manager Dr Pranill Ramchander would only confirm that preparatory work was under way on the disposal.

"It would not be appropriate to comment on parties that may have expressed an interest in any of the businesses for divestment, nor on potential value for those businesses.

"However, we do believe these businesses to be attractive assets and we expect them to generate strong interest from potential bidders," he said in response to questions posed by Engineering News Online.

ArcelorMittal South Africa CEO Nonkululeko Nyembezi-Heita, who did not rule out a bid for Scaw when canvassed on the matter late last year, said that the overlap between the two companies would probably raise competition concerns.

In fact, speaking following the release of its year-end results on Wednesday, she described the "competition issues" as "daunting", noting that the company was still the subject of several investigations, one of which had been referred to the Competition Tribunal.

Nevertheless, the company had pre-emptive rights in Consolidated Wire Industries, a joint venture with Scaw, which might be exercised.

"We will really be informed by the process that Anglo decides to follow. If Anglo decides to break Scaw up and sell it in parts, then it raises the possibility of bidding for some of the assets. If they sell it as a unified transaction, it makes the prospects that much dimmer for ArcelorMittal South Africa," she explained.

NO WORD ON ZISCO
Meanwhile, Africa's largest steel producer had still not received word from the Zimbabwean authorities about the status of its bid for the debt-laden Zimbabwe Iron and Steel Company (Zisco).

The South African company had initially anticipated receiving clarity by the end of December 2009, but none had been forthcoming.

However, Nyembezi-Heita indicated that it remained interested in the bid and that a "successful" outcome would affect the way it approached its future long-products growth strategy.

She also believed that the Zimbabwean authorities would be "flexible" in enforcing proposed indigenisation rules, which would require foreign companies to "localise or indigenise" 51% or their interest in all business sectors in Zimbabwe over the next five years.

The authorities, she said, were aware that such a requirement would be a "huge obstacle" to foreign direct investment and they would, thus, seek to balance the need to attract investors and foreign capital with a desire to foster local ownership.

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