South Africa is finalizing a funding agreement to support ArcelorMittal S.A.'s unit in South Africa and prevent the closure of key steel mills, which are vital to the country’s economy.

The government plans an initial 500 million rand to pay steelworkers over six to eight months, with additional bridge financing from the state-owned Industrial Development Corp. (IDC). In return, IDC may increase its stake in ArcelorMittal South Africa (AMSA) beyond its current 8.2%. Officials are also urging AMSA to consider selling its Vereeniging and Newcastle mills instead of shutting them down.

Keeping the mills operational is crucial for South Africa’s infrastructure plans and industries. The IDC, which has previously supported AMSA, views securing steel supply as a strategic priority.

AMSA is seeking 3 billion rand to maintain production for another year. A decision could be announced this week, with AMSA’s board currently reviewing proposals.