ArcelorMittal’s South Africa unit will sell its 50% stake in trading and shipping company MIHBV to its joint venture partner Macsteel Holdings Luxembourg (MacHold) for $220 million, the steel maker said on Monday.
“The proceeds of the sale will significantly strengthen the balance sheet of ArcelorMittal South Africa and will be used to fund working capital requirements and investments in the operating businesses,” ArcelorMittal SA Chief Executive Kobus Verster said in a statement.
The company’s share price rose more than 24% at one point on the news before ending 5.4% higher.
MacHold already holds a 50% stake in MIHBV, which is engaged in steel trading and shipping. The other 50% is held by ArcelorMittal SA.
“In the early years, most of the steel for the joint venture was sourced from ArcelorMittal South Africa. Today, while it remains an important source of steel products, ArcelorMittal SA supplies less than 20% of the total tonnages traded and less than 2% of volumes shipped by MIHBV,” Verster said.
“The investment is no longer considered to be a core asset and we have decided to dispose of our interest,” he said.