Following extensive negotiations with Capital Africa Steel (CAS), LionSteel South Africa (SA) has acquired Mozambique-based steel pipe manufacturing mill Capital Star Steel SA (CSS), which is located in Matola.

The acquisition, worth more than R500-million, involved a comprehensive debt restructuring with a syndication of four Mozambique banks, enabling CAS, the WBHO/Brait subsidiary, to sell 100% of its wholly owned Mozambique business to LionSteel SA.

CAS CEO Edwin Hewitt says, after an extensive global bid process, CAS was able to secure a mutually acceptable deal as a result of LionSteel CFO Pierre Willemse presenting the successful offer to the Mozambique banking syndicate.

The plant, commissioned in 2009 with petrochemicals accreditation authority the International American Petroleum Institute accreditation, and a production capacity of 200 000 t, is capable of producing steel electric resistance welded pipes from 8 inch to 24 inch in diameter.

A unique position of CSS is the installation of two coating plants within the production cycle, making CSS the only production facility of its kind in Africa – a facility fast becoming a prerequisite within the international pipeline community.

LionSteel SA CEO David Scheepers says that, with the current planned pipeline projects for gas infrastructure within the region exceeding 3 500 km, LionSteel SA is confident that the timing of this investment has positioned Capital Star Steel as a strategic player in the market. “We are also delighted that this acquisition includes the retention of key expertise and the necessary skills held by previous management and staff.”

The recent legislative support for local content within the Mozambique oil and gas sector has resulted in significant interest in Capital Star Steel’s role as a strategic supplier of pipes to the Mozambique oil, gas and water infrastructure sectors. LionSteel SA believes that its acquisition of CSS will not only enhance its local presence in these Mozambique sectors, but also raise its profile throughout the African continent.