Tatas alone in fray for Highveld

Tata Steel has emerged the front-runner for buying 79 per cent in South Africa-based Highveld Steel after rival Mittal Steel South Africa gave strong hints of shelving its acquisition plans, with the company's bid running into "procedural difficulties".

Earlier, Russian firm Metalloinevest had pulled out of the race for the Highveld Steel stake, which is held by Anglo American Group.

This leaves Tata Steel as the only dominant player in the fray. The other bidders are the UK-based Kermas group and local player Xstrata. The stake is reportedly worth almost $1 billion.

When contacted, a Tata Steel executive stated that the company "still remains interested in Highveld". But he refused to confirm if a bid had been placed. In March, Anglo American had said due diligence probes by several prospective buyers had begun. Tata Steel had then stated that it had begun due diligence for Highveld. "It is expected to take a couple of months," a Tata Steel spokesperson had told Business Standard then.

Late last week, Davinder Chugh, chief executive of Mittal Steel South Africa, the group's fully owned subsidiary, said, "We had expressed our interest in buying Highveld, but there are perceived difficulties, which we are trying to deal with. We have so far not submitted any offer. The difficulties are in regard to perceptions about competition issues."

the South African media reported that a case had been filed against Mittal Steel South Africa at the country's Competitions Tribunal by two mining companies. Sources added that the company might not get involved in a bidding that was likely to be rejected by the authority.

The company is under fire in the African country for alleged unfair pricing methods. It is also fighting the local tax authorities which have rejected the company's objection to taxation on a payment to its parent group.

There has also been concerns in the country over Mittal Steel South Africa's "monopoly-like" position in the local industry.

Mittal-Highveld deal would have put almost all of the country's production under the Mittal banner. Mittal Steel South Africa is the biggest steel manufacturer in South Africa with a capacity of 7.1 million tonnes per annum

Highveld, the second biggest steel firm in South Africa, is the largest vanadium producer in the world. Vanadium is used for making steel.

Highveld also produces steel, vanadium products, ferroalloys, carbonaceous products and metal containers. Highveld exports half of its products from its South Africa-based processing plants.