The Industrial Development Corporation (IDC) has finalised the acquisition of steel based manufacturing entity Scaw from Anglo American with a promise to expand the operation beyond the South African borders.
Scaw is in the manufacturing of a diverse range of steel products including rolled steel, most of which is supplied to downstream operations. Others products include steel and alloy iron castings, cast alloy iron and forged steel grinding media, chain, steel wire rope, strand and wire products. As such the operation is seen as a critical player within the South African manufacturing sector.
The IDC moved in together with a host of existing black economic empowerment (BEE) investors into Scaw after Anglo American put Scaw on sale and as part of a wider disposal of noncore assets
The acquisition of Anglo American’s 74% interest in Scaw was announced in April this year for a total consideration of R3.4 billion. The transaction also promised to enhance the participation of existing BEE Scaw partners.
In an announcement issued yesterday the IDC said it has met all legal and regulatory requirements under South African law. It added that the existing BEE partners, which include Cyril Ramaphosa’’s Shanduka Resources and Sipho Pityana’s Izingwe will jointly hold 21% in Scaw. The remaining 5% be held by staff through an employee share ownership programme.
IDC Divisional Executive of Mining and Manufacturing Abel Malinga said the IDC “It is critical to maintain and deepen the industrialisation of the economy by refocusing the beneficiation strategy to support fabrication and manufacturing. Scaw’s activities are in the last phase of beneficiation, which is job intensive, and therefore this acquisition is in line with the IDC and government’s strategic objectives.”
“This puts the IDC in a unique position to make the necessary investments to grow Scaw’s operations, supporting beneficiation, infrastructure development and South Africa’s economic growth. Moreover, the acquisition affords South Africa an opportunity to improve our intra-trade within the African continent in the supply of mining consumables and rail infrastructure”.
“High steel input costs inhibit the development of a robust and sustainable downstream steel fabrication industry to the detriment of job creation. As a leading diversified South African fabricator, Scaw has the potential to be a key supplier to planned infrastructure and construction programmes. IDC aims to leverage existing strengths within the business, to grow the entity into a global player.”
Scaw’s Chief Executive Christopher Davis said “Today heralds a new chapter for Scaw. The market opportunity is significant and under the strategic leadership of our new owners we are well positioned to capitalise on the attractive growth potential in the African mining industry as well as the expansion of rail and power in South Africa and beyond”