Indian steelmaking tycoon Lakshmi Mittal met with South African ministers in Davos this week as the country seeks to head off the planned closure of steel mills that are crucial to the local economy.

The meeting, which the South African Treasury confirmed, included Finance Minister Enoch Godongwana, his trade counterpart Parks Tau and electricity head Kgosientsho Ramokgopa, people familiar with the situation said, asking not to be identified as the meeting was private. Treasury declined to comment further.

While officials didn’t reach a conclusion, they discussed the issues that triggered the decision, the people said. Arcelor Mittal South Africa (AMSA) said on January 6 that a dysfunctional freight-rail service, soaring electricity prices, a low-growth economy and state-imposed discounts on scrap metal — used by local competitors to make steel — prompted its call.

AMSA plans to close three plants — including two steel mills that the auto-making, mining and construction industries depend on — at the end of the month, threatening President Cyril Ramaphosa’s hopes of spurring a R4.8 trillion infrastructure boom.

AMSA initially threatened to close the Vereeniging and Newcastle mills — which produce some specialised products that local rivals can’t currently make — a year ago. Twelve months of talks, which the government revived this month, haven’t yielded a solution.

AMSA declined to comment, while Tau and Ramokgopa’s departments didn’t respond to queries.

The steel producer seeks concessions — including changes to the way scrap is treated — and has lobbied for tariffs on imported steel, the company has said in the past.

Key among AMSA’s complaints is the 2013 imposition of the so-called price preference system, which will only allow local scrap collectors to export the product if there are no local buyers. The state also imposes a 30% discount on the international price of scrap.

In 2020, the government imposed a further 20% tax on exports of steel scrap. AMSA uses iron ore rather than scrap to make steel.

Mittal and the South African government have endured a testy relationship since he took over Iscor, the former state-owned steelmaker, in 2003. AMSA has been accused of boosting prices excessively and under-investing in its plants. In 2016, local antitrust authorities fined it the equivalent of $110-million for anti-competitive behaviour.

Automakers — including Volkswagen AG and Toyota Motor Corp. — have asked government and AMSA to either avoid the closures or at least delay them for 12 months so that they have time to find alternative suppliers. South African investors have made offers for AMSA’s plants, which the company has rebuffed.