Usmanov and Mittal in $1bn fight over South African steel group

Click to follow
The Independent Online

Mr Usmanov, who sold down his 13 per cent stake in the Anglo-Dutch steel group Corus late last year at a profit of more than £130m, may find himself competing with the global leader Mittal Steel in the auction of Anglo's Highveld business.

Kermas, a business with operations in Russia, Germany and Turkey, has said it will also be bidding for Highveld, which is South Africa's second-biggest producer. India's Tata Steel is also likely to be involved, though it has indicated it is not interested in the whole of Highveld.

Mittal Steel, which is majority owned by Lakshmi Mittal, is embroiled in a bitter $23.5bn hostile bid for Arcelor in Europe. Mittal's South African subsidiary is already the biggest steel industry player in South Africa. Davinder Chugh, the chief executive of Mittal Steel South Africa, suggested in November that the company would be interested in Highveld. But Mittal declined to comment yesterday.

Analysts said Mittal would face huge regulatory problems if it tried to buy Highveld. Not only is it already the market leader in South Africa but the government is concerned about the price at which Mittal supplies steel to businesses in the country. Mittal provides steel at world prices, rather than reflecting the fact that the raw materials are available in South Africa, meaning that the product ought to be available more cheaply, the government says.

Mr Usmanov's company Metalloinvest, which runs Urals Steel, confirmed its bid for Highveld. "The company is interested in this project," Metalloinvest said. "We have been included in the shortlist. The organisers are currently evaluating the candidates."

Mr Usmanov, one of Russia's richest men who is reckoned to be worth $2bn, started building a stake in Corus in 2003, using a Cyprus-based investment vehicle, becoming the second-biggest investor. He tried but failed to get a seat on the Corus board.

Anglo American announced in October it would sell its 79 per cent stake in Highveld as the result of a group-wide strategic review.