South Africa moves towards ₹5,400 crore takeover of Lakshmi Mittal’s struggling steel business: What’s in the deal?

South Africa is moving towards the proposed ₹5,400 crore takeover of ArcelorMittal South Africa, the struggling steelmaker controlled by Indian-born billionaire Lakshmi Mittal and his son Aditya Mittal.

South Africa's state-owned Industrial Development Corporation (IDC) has reportedly reached an initial agreement to acquire ArcelorMittal South Africa, with the proposed deal comprising ₹1,620 crore in cash and the assumption of around ₹3,780 crore in debt. The reported terms have not been officially confirmed, and the transaction remains subject to final agreements and shareholder approval.

For the Mittals, who lead the global steel group ArcelorMittal, the deal could mark a retreat from a business that has struggled with persistent losses and mounting operational pressures.

For South Africa, it offers a potential route to preserve steelmaking capacity, thousands of jobs and supplies to industries ranging from mining to automobile manufacturing.

However, the reported financial terms have not been officially confirmed, and the deal still requires definitive agreements and shareholder approval.

Under the reported proposal, the IDC would acquire ArcelorMittal South Africa for a total consideration of approximately 10 billion South African rand, equivalent to around ₹5,400 crore.

The transaction is expected to comprise:

• Cash payment: Approximately ₹1,620 crore, or 3 billion rand.
• Debt assumption: Around ₹3,780 crore, or 7 billion rand, in existing liabilities.
• Total proposed value: Approximately ₹5,400 crore, or 10 billion rand.

This means most of the proposed deal value would come from the IDC taking responsibility for the steelmaker's debt rather than paying the entire amount directly to ArcelorMittal.

Bloomberg reported that the parties were aiming to complete the transaction before the end of 2026. The IDC has said discussions are continuing as it seeks a sustainable solution to preserve South Africa's steelmaking capacity.

The proposed takeover follows years of financial difficulties at ArcelorMittal South Africa, which has struggled with weak demand, high electricity and railway costs, ageing plants and competition from imported steel.

ArcelorMittal's losses narrowed to approximately ₹1,810 crore in 2025, from around ₹2,740 crore in 2024.

The crisis deepened when ArcelorMittal announced plans to wind down its long-steel operations in Newcastle and Vereeniging. The proposed closures threatened about 3,500 direct and indirect jobs, while also putting pressure on suppliers and businesses dependent on its production.

One of the companies affected could be Assmang, whose Beeshoek iron-ore mine relies heavily on ArcelorMittal South Africa as a customer. Assmang has warned that the mine could close, putting another 688 jobs at risk.

A state takeover of ArcelorMittal's outh Africa unit could help preserve domestic steel production and protect industries that rely on locally manufactured steel. However, it would also leave the IDC responsible for a business facing substantial financial and operational challenges.

ArcelorMittal South Africa is controlled by Luxembourg-headquartered ArcelorMittal, the global steel group led by executive chairman Lakshmi Mittal and chief executive Aditya Mittal.

For the global parent company, selling the South African operation could provide an exit from a loss-making subsidiary that has required repeated financial support.

The IDC already holds an approximately 8.2% stake in ArcelorMittal South Africa and has extended loans worth around ₹1,420 crore to the company over the past two years. A takeover would transform it from a minority shareholder and lender into the business's controlling owner.

The state investor could also seek an experienced industrial partner to help revive the steelmaker, although no partner has been publicly identified.

Negotiations between the IDC, ArcelorMittal and the South African government began after the steelmaker announced plans to close parts of its long-products business in November 2023.

Discussions stalled over the company's valuation, with earlier proposals reportedly reaching approximately ₹3,780 crore in 2025. ArcelorMittal sought a higher price, prolonging negotiations over the future of the business.

The parties resumed discussions and announced in January 2026 that they were working from a non-binding term sheet for a possible transaction. The newly reported structure, combining cash with the assumption of debt, could help bridge their differences over valuation.

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