The Australian businessman, Kerry Stokes, has joined with the US company Steel Dynamics in a $13.2 billion bid for BlueScope Steel. The all-cash offer, which values BlueScope at $30 a share, was made on December 11 but only became public on January 5. News of the offer caused BlueScope´s share price to surge 21% higher to $29.54 by the end of trading on January 6. Some market analysts said this implies a deal will materialise. The offer was made jointly by SGH Ltd (formerly Seven Group Holdings) which is majority owned by Mr Stokes, and Steel Dynamics, which is the third largest producer of carbon steel products in the United States. SGH and Steel Dynamics said their plan would be to break up the Australian steelmaker along geographic lines – SGH taking the Australian operations and Steel Dynamics getting the North American unit. The takeover process would see SGH acquire all of BlueScope’s shares and then offload its North American businesses to Steel Dynamics. The suitors said the Stokes-controlled entity would keep BlueScope’s key Australian management if a deal went ahead, while Steel Dynamics would retain its North American leaders. They gave no details about employee retention.

In a statement to the Australian Stock Exchange, BlueScope Steel said it was considering the approach, but noted that it had rebuffed three previous approaches from Steel Dynamics or groups involving it – one of those bids being just a dollar per share lower than the current indicative bid. Nevertheless, mindful of its obligations, BlueScope said in its statement: “The Board of BlueScope is committed to optimising value for its shareholders across all of its businesses and continues to regularly assess all options to accelerate realisation of this value”.

In a statement to the stock exchange on January 5, the SGH chief executive, Ryan Stokes, said BlueScope’s Australian business “is a strong strategic fit” for his company. SGH owns a portfolio including the country’s biggest construction materials supplier, Boral. It also owns Caterpillar dealer Westrac, industrial hire group Coates, and 30% of oil and gas company, Beach Energy. Meanwhile, Steel Dynamics´s co-founder and chief executive officer, Mark Millett, said: “We believe the acquisition of BlueScope’s North American assets will be highly complementary to our existing operations and further expands our capabilities domestically”. BlueScope operates five businesses in North America and was considered largely shielded from tariffs as it ships only a small amount of steel from Australia to the US. However, weak demand and a significant write-down on its US metal coatings unit badly affected its fiscal 2025 earnings.

SGH and Steel Dynamics confirmed they have entered a 12-month exclusivity agreement with each other and have committed significant resources to progress the deal. BlueScope said the bidders wanted exclusive due diligence but it did not specify whether it agreed to this. Under Australian law, a prospective bidder gets exclusive due diligence for four weeks. In Sydney, Omkar Joshi, the chief investment officer at Opal Capital Management, said the carve-up proposal looked straightforward since BlueScope’s Australian and US units were separate. But, he added: “The bidders will likely need to increase their bid before it can be accepted”.

Elsewhere, at the very big end of town, it seems BHP and China still can´t come to terms. ASN readers will recall that back in September of last year the Reuters news agency claimed the CMRG (China Mineral Resources Group) had instructed Chinese mills and traders to not purchase any new spot cargoes of BHP´s Jimblebar blend fines. Iron ore is the key ingredient in steelmaking. The China Mineral Resources Group (CMRG) was established in 2022 as China´s state-run, centralised buying agency, intended to consolidate purchases on behalf of China´s hundreds of steel mills and traders. One large powerful voice, instead of many small ones.

The September ban wasn´t confirmed, with the only official statement being that price negotiations for 2026 were ongoing. It´s believed the 2026 price deal under negotiation would account for the lion’s share of production from BHP’s mines in Australia’s northwest, and around a fifth of China’s needs. At present, Australia supplies China with about 60% of its seaborne iron ore. BHP alone supplies 13%.

Then, in November, Reuters said it had spoken with dozens of mills and traders who verified that the CMRG had extended its ban to include BHP´s Jinbao fines. Again, this drew no comment from any of the parties involved. However, it´s only logical that the CMRG would attempt to secure better terms from BHP, if only to justify its recent creation. The November decision, if it happened, would mark an escalation because CMRG had not previously banned multiple products from a single supplier. Whatever the result, Rio Tinto, Fortescue and Brazil´s Vale are taking careful note of proceedings.

The impasse comes at a critical time for the flow of iron ore around the world, as a new supply source looms. From 2028, the vast Simandou project in West Africa’s Guinea is slated to produce around 7% of global supply, tipping the market into an estimated 65 million metric tonne surplus and thus giving CMRG a better bargaining position. Chinese firms are the biggest stakeholders in Simandou, followed by Guinea and Rio Tinto, which owns a 22.5% share. “The ramp-up of Simandou is widely seen as heralding a structural shift in market dynamics. It will fragment Australia’s dominance in supplying iron ore to China,” RBC Capital Market’s Kaan Peker told Reuters. In that context, Peker said, “it makes sense” for China to play hardball for better contract terms in 2026.

Roll on the New Year.