Tatas, Mittals in fray for Highveld

Top firms eyeing 79% stake in SA steel firm.

Tata Steel has run into Mittal Steel in the race to buy 79 per cent stake in Highveld Steel of South Africa (SA). Highveld Steel is owned by the Anglo American group.

In an e-mail reply to Business Standard, a spokesperson for Laxmi Niwas Mittal-controlled Mittal Steel said, "We can inform that Mittal Steel South Africa has registered its interest in acquiring Highveld Steel." The 79 per cent stake is believed to be worth almost $1 billion.

Mittal Steel South Africa, a wholly owned subsidiary of Mittal Steel, is the biggest steel manufacturer in the African country with a capacity of 7.1 million tonnes per annum. It had entered the country by taking majority control of a local player, Iscor, two years ago.

Tata Steel has begun due diligence for Highveld. "It is expected to take a couple of months," a Tata Steel spokesperson told Business Standard.

Metalloinvest, owned by Russian tycoon Alisher Usmanov, is also in the fray. Other bidders include the local arm of the UK-based Kermas Group and South African Xstrata.

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.

But, as in the case of its ongoing bid for Arcelor of France, Mittal Steel is expected to face local opposition again. Steel industry experts say that Mittal Steel may face regulatory problems in its bid for Highveld.

Not only is it already the market leader in South Africa but the South African government is said to be concerned about the price at which Mittal Steel supplies steel in the country.

Mittal Steel provided steel at world prices, rather than reflecting the fact that raw materials were available in South Africa (meaning that the product ought to be cheaper), the local media quoted the government as saying.