IDC Investments
Government Interventions
The government has been involved in the steel industry since before 2013 and has already injected over R14 billion into the sector.
Cisco was placed in business rescue on 17 November 2020. According to the Business Rescue Plan of DHT Holding (Pty) Ltd – the Cisco legal entity -, the following amounts were owed (paragraph 9.1):
An amount of R225 000 000 in cash shall be paid by the Kamal Group to the IDC for the sale of ordinary shares in the Company in full and final settlement of all its claims. In addition, the Excluded Immovable Properties shall be sold to the highest bidder and the proceeds of sale shall also be paid to the IDC;
The balance of R65 000 000 of the Kamal funding will be utilised in settlement of the BRP fees and costs, all post commencement liabilities and the full and final settlement of Concurrent Creditors, SARS and the employees.
The offer also includes provision for a SARS dividend in the amount of R2 188 656.00, which represents the full amount owing as at the publication date. However the BRP’s are waiting on an assessment that may increase or decrease the amount payable to SARS;
The IDC had an exposure of R449 million at the time Cisco went into business rescue. They recovered R225 million, writing off R224 million.
The IDC holds 85% of the shares in Cast Products SA, having invested R888 million into the business. Following liquidation proceedings, they recovered R388 million, having written off R500 million.
Naledi Foundries was placed into business rescue in April 2022. The IDC (shareholders and quasi equity loans) is owed R537 million. Naledi Foundries has spent over R100 million on new equipment. This includes two new IFM 7 multi-function furnaces with twin-power systems supplied by ABP Induction. However, the factory was looted and partially destroyed while the company was in business rescue, likely resulting in the assets being further written down. It’s not clear how much, if anything, will be recovered.
These failures are happening despite government cash and policy support. If any of this support is lifted the balance of the industry will fail too. Yet, the flow of cheap capital combined with cheap raw materials has attracted continuous investment, placing pressure on portions of the value chain which don’t benefit for government support.
In the last four years, the IDC has increased its exposure into this sector by R3.3 billion, with a not inconsequential amount going into businesses which have subsequently failed. We were unable to obtain information of investments made before 2019
IDC Investments
In the last four years, the IDC has increased its exposure into this sector by R3.3 billion, with a not inconsequential amount going into businesses which have subsequently failed. We were unable to obtain information of investments made before 2019.
| Company | 2019 | 2020 | 2021 | 2022 | 2023 | Grand Total |
|---|---|---|---|---|---|---|
| Cast Products South Afica (Pty) Ltd Fomely Cast Poducts | R 62,000,000 | R 40,000,000 | R 178,500,000 | R 382,947,679 | R 268,500,000 | R 931,947,679 |
| Coega Steels (Pty) Ltd | R 57,000,000 | R 70,000,000 | R 35,000,000 | R 162,000,000 | ||
| DHT Holding Afica Pty Ltd (CISCO) | R 180,000,000 | R 180,000,000 | ||||
| Duferco Steel Processing (Pty) Ltd | R 405,000,000 | R 433,581,500 | R 838,581,500 | |||
| MSG Afrika Broadcasting (PTY)LTD | R 6,434,566 | R 6,434,566 | ||||
| Naledi RingRollers (Pty) Ltd | R 53,000,000 | R 53,000,000 | R 106,000,000 | |||
| SA Steel Mills (Pty) Ltd fomely Proroof Flashing | R 404,000,000 | R 404,000,000 | R 808,000,000 | |||
| Scaw South Afica (Pty) Ltd | R 500,000,000 | R 500,000,000 | R 1,000,000,000 | |||
| Unica Ion and Steel (Pty) Ltd | R 20,000,000 | R 20,000,000 | ||||
| Vee Aluminium (Pty) Ltd | R 170,100,000 | R 170,100,000 | ||||
| Vee Steel Mills (Pty) Ltd | R 200,000,000 | R 200,000,000 | ||||
| Grand Total | R 710,434,566 | R 473,581,500 | R 378,500,000 | R 1,600,047,679 | R 1,260,500,000 | R 4,423,063,745 |