It’s Mittal Vs Tata Steel In South Africa

It’s Mittal vs Tata Steel in South Africa

by Satish John, NDA-Money, Diligent Media (India), MUMBAI

5th February 2006

In the heart of Europe, the world’s No 2 steel-maker, Arcelor, is battling Lakshmi Mittal in a desperate attempt to stave off a possible takeover.

But there’s another battle in the making, this time involving an Indian company, Tata Steel. The oldest Tata group firm is challenging Mittal Steel for Highveld Steel, a South African steelmaker put on the block by its owner Anglo American. Anglo American own 79% in Highveld, which is the world’s leading producer of vanadium, used in the production of alloy steels.

Tata Steel officials had in November last year confirmed the firm’s interest in Highveld, even as Mittal Steel SA, the country’s largest producer of steel, was also eyeing it. If Mittal acquires Highveld, its steel operations would become a monopoly in South Africa, giving it tremendous pricing power.

On the other hand, the Tatas already enjoy a good rapport with the South African government, which has allowed them to buy a slice of the country’s No 2 telephony operator.

However, it’s not just Mittal versus Tata. Another consortium led by the UK-based Kermas group is also in the fray for Highveld Steel, which is South Africa’s second biggest steelmaker after Mittal SA. The Kermas Group owns South African ferro-alloys producer Samancor Chrome.

If they gain control, the Tatas are believed to be keen to split the vanadium and steel interests of Highveld, as vanadium would make the acquisition costlier.