Tata Steel eyes 79% in Highveld steel

By agencies   |   Thursday, 16 March 2006, 08:00 Hrs
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KOLKATA: Tata Steel eyes to place a bid for 79 percent controlling stake in the South African Highveld Steel and Vanadium Corporation, which has been put up for sale in October 2005 by Anglo American, the controlling stakeholder.

According to the highly placed sources, Tata Steel has begun a due diligence for the South African steel company.

Meanwhile, in a statement early this month Anglo American said, "Several interested parties have commenced due diligence investigations in respect of Highveld. Shareholders are advised to continue to exercise caution when dealing in Highveld shares."

Highveld is South Africa's second largest steel maker after Mittal South Africa and the world's top supplier of vanadium, used in the production of special and alloy steel. Tata Steel has been talking to Anglo American about Highveld Steel. Tata Steel is likely to be pitted against Mittal Steel South Africa for Highveld, an international steel stock analyst said.

Mittal Steel's 52 percent-owned Mittal Steel South Africa has recently said it was taking part in the bid process, indicating start of a due diligence probe. Mittals took over Iscor of South Africa a few years ago and wanted to consolidate the South African steel sector by buying into Highveld.

A consortium led by Kermas South Africa, the South African Arm of UK-based Kermas group, is also bidding, industry sources said.

Prior to this, Tata Sons Chairman, Ratan Tata, had said that the group "expressed an interest in the property", but was concerned about the high levels of vanadium output, as the acquisition of vanadium-producing assets is not part of Tata Steel's plans. He had also suggested that high vanadium price level might add extra premium for the company's valuation.

This concern had cropped up previously as, shortly after Anglo American's restructuring announcement, analysts were suggesting that the firm could be split `on paper'.

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