In a boost for South Africa’s steel industry, the South Africa’s state corporation – Industrial Development Corporation (IDC) is leading a consortium of South African and Chinese companies in a R5.3bn (approximately $610m) bid for a 74.5 per cent stake in Palabora Mining.

Palabora Mining is SA’s biggest copper miner and generates most of its earnings from exporting magnetite – a key ingredient for Chinese steel mills and producing vermiculite, which is used by the aluminium smelting industry.

The 74.5 per cent stake is currently held by London based Rio Tinto and Anglo American. Anglo American will generate R893m (approximately $102m) from this sale and London-based Rio Tinto will generate around R4.4bn (approximately $506m).

The board of Palabora said: “The mining giants have reached a binding agreement with the IDC consortium to sell their combined interests at R110 ($12) a share, valuing the company at R5.3bn.”

Companies participating in the consortium are: Hebei Iron & Steel Group, China’s largest steel producer acquiring 35 per cent; Tewoo Group acquiring 20 per cent; General Nice Development acquiring 25 per cent and the IDC, which will hold 20 per cent.

IDC spokesman Mandla Mpangse said: “The acquisition of Palabora is important as it secures and facilitates backward integration of sizable magnetite ore material for a number of IDC steel initiatives, including the Masorini Iron and Steel project and the IMBS scrap substitute project under construction in Phalaborwa.”

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