Sep 26, 2011
Mittal pulls back from BEE deal, confirms R1.1bn Newcastle lossBack
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The JSE-listed company, led by CEO Nonkululeko Nyembezi-Heita, on Monday withdrew its cautionary announcement relating to the BEE transaction and said that the parties failed to agree on an extension of conditions.
The consortium was led by Sandile Zungu and includes Mabelindile Luhlabo, Mojalefa Mbete, Jagdish Parekh's Pragat Investments, Prudence Mtshali, Phemelo Sehunelo, Zebo Tshetlho, Zungu's Zico, the Gupta family's Oakbay Investments and Duduzane Zuma's Mabengela Investments.
The remaining 25% of the consortium was set aside for women and youth groups, as well as new BEE entrants.
The BEE transaction, unveiled in August last year, had been criticised by minority shareholders for lacking a broad-based dimension.
The BEE deal was announced alongside the proposed R800-million acquisition of Imperial Crown Trading, after JSE-listed Kumba Iron Ore said it had cancelled a cost-plus 3% iron-ore supply agreement for 2.25-million tons a year of Sishen material, after Mittal failed to convert its Sishen rights.
Meanwhile, Mittal also said it expected to lose about R1.1-billion after the structural failure of a gas-cleaning plant at its Newcastle facility last month.
The R1.1-billion estimate included property damage of R245-million.
The August 5 structural failure, which rendered the blast furnace inoperable, would have a 445 00 t impact on Mittal’s production.
It reported that repairs were progressing according to plan and that the furnace would be recommissioned in the first week of December.
The company had secured 240 000 t of steel from various sources, including from ArcelorMittal Group mills globally, to minimise the impact of product shortage in South Africa.
The South African Reinforced Concrete Engineers Association warned in August that the Newcastle shutdown could further exacerbate ongoing shortages of reinforcing steel, or rebar.
Mittal closed at R58.39 a share, up 1.92% from Friday's R57.29 a share.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
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