South Africa's Afripalm Resources has signed an agreement with Steel Authority of India (SAIL) to build a steel mill in South Africa, according to a report in the Business Day newspaper.
The paper said the two companies would carry out a feasibility study for a R21 billion plant with a production capacity of between three to five million tonnes of steel a year.
Under the terms of the agreement, Afripalm will also establish a distribution business for SAIL’s products in South Africa, the paper said.
No details were released on how the shareholding in the project would be divided.
SAIL, which is government-owned, has previously said it plans to spend $12 billion on the construction of four overseas plants in Indonesia, Oman, Mongolia and South Africa.
The South African steel market is currently dominated by ArcelorMittal South Africa, a unit of the world's largest steel producer.
SAIL manufactures both long and flat steel products, as well as tubular products and railway products such as rails and wheels. Other products include pig iron and fertilisers. The company’s customers include the defence and railways sectors, as well as those in construction, heavy engineering and automotive industries.
Afripalm was founded in 2006 by the former CEO of Anglo American South Africa, Lazarus Zim. The company makes investments in greenfield and brownfield projects with a focus on precious metals and stones. The company also invests into and develops mineral and mining opportunities via its investment vehicle, Mvelaphanda Resources.
