South Africans could be asked to foot the bill for their country’s steel industry twice over, and one civil society organisation wants the public to see the numbers before any of it happens.
The Organisation Undoing Tax Abuse (OUTA) has warned that the proposed takeover of ArcelorMittal South Africa (Amsa) by the Industrial Development Corporation (IDC) carries a heavy price for ordinary citizens, from the money placed on the state lender’s balance sheet to the higher steel prices that could follow if trade protection is raised to keep the company afloat. According to Moneyweb, the deal could involve about R3 billion in cash and the assumption of about R7 billion in Amsa debt. Amsa’s stock exchange disclosures confirm that talks are at a late stage, although conditions and approvals are still outstanding.
For the public, the stakes are practical rather than abstract. The government has already imposed import duties and other trade protections on selected steel products, and OUTA cautions that raising these barriers further to keep Amsa viable would shift part of the rescue onto steel users. A municipality building a bridge or upgrading a water treatment plant works with a fixed budget, so every extra rand spent on steel means less money for construction. Fabricators bidding for work elsewhere in Africa face the same squeeze against suppliers from China, India and the United Arab Emirates. A Gauteng fabricator paying more for steel and transport must still match the delivered price of rival suppliers, and customers have no obligation to pay a premium to support South Africa’s industrial policy. If contracts go elsewhere, the cutting, welding and assembly jobs go with them. OUTA acknowledges that the jobs at Amsa matter, but stresses that so do the jobs in the industries that buy its steel.
The IDC has already supported the steelmaker, providing a R1 billion working capital facility in June 2024 and a further R1.68 billion facility in March 2025 to delay the closure of Amsa’s long steel operations. OUTA points out that it remains unclear how these facilities would be treated in a takeover.
The timing is sensitive. President Cyril Ramaphosa is seeking a commission to oversee and coordinate the restructuring of companies the state already owns, many of which are failing or performing well below expectations despite billions of rand in bailouts and repeated promises to bring in equity partners, improve performance and appoint professional management. OUTA argues that the president should explain why South Africans should take on another such company before chairing a commission on how to turn the existing ones around. Further details of the warnings can be read at https://www.greenbuildingafrica.co.za/outa-warns-idc-takeover-of-arcelormittal-south-africa-risks-making-the-country-pay-twice-for-steel/
At the heart of the objection is the risk to public capital. Control of Amsa would place more of the state owned lender’s money in danger, and would give the government a strong incentive to protect that investment if losses continue, an outcome most business economists expect. In OUTA’s view, this is how the country ends up paying twice: the first bill sits on the IDC’s balance sheet, the second arrives through the price of steel.
Market structure adds a further complication. South Africa already has scrap based mini mills that compete with Amsa in some products, and the IDC has financed some of them. If the government also controls the country’s largest primary steel producer, it would hold a financial interest on several sides of the market while setting the tariffs that affect all of them. OUTA also says the risk of cadre deployment in a turnaround demanding highly specialised expertise must be taken seriously, and it believes the deal carries the hallmarks of throwing good money after bad.
Before public capital is committed, OUTA wants the IDC to show which steel grades South Africa genuinely needs to produce locally, what it would cost to modernise Amsa’s ageing facilities, and where the company will find and retain the skills to run them. It also wants the IDC and Amsa’s leadership to explain how the business can earn a return under realistic assumptions about electricity costs, freight, demand and import competition. A change of shareholder, OUTA argues, answers none of these questions.
The organisation has previously argued that the government should divest from businesses in competitive sectors and bring in private equity partners where commercial and public service mandates overlap. It has also asked how many more commissions, task teams and bailouts South Africa needs before the government acts on governance failures it has known about for years. The proposed commission offers the president a chance to apply that scrutiny to existing state enterprises, but OUTA says he should start now by asking the IDC to publish its business case, set out how much public capital is at risk, and state what steel prices and tariff protection the deal assumes.
In OUTA’s assessment, the country would get far more for its money by getting ports and freight rail working properly. Reliable freight would lower costs for domestic mills, give steel users better access to imports where needed, and help South African fabricators deliver into African markets on time and at competitive prices. If buying Amsa only works by making everyone else pay more for steel, OUTA concludes, the IDC should walk away.