Johannesburg - Financially distressed steel maker Evraz Highveld Steel and Vanadium has asked the National Energy Regulator of SA (Nersa) to grant it a gas licence for one of its facilities in Mpumalanga.
The move is a shot at reviving the troubled company. Amid distressed domestic and global steel markets and an influx of cheaper imports from China, Evraz Highveld went into business rescue in April last year.
In February this year, the company retrenched 1 700 permanent employees.
A proposed sale of the company to Chinese group International Resources fell through earlier this year, dashing hopes of a quicker resuscitation of the company.
In documents sent to Nersa last month, Evraz Highveld said it was investigating alternative methods of income generation.
One of the proposed projects is to start the structural mill on the Evraz Highveld steelworks site, which in this instance, would create approximately 400 jobs in the eMalahleni area of Mpumalanga.
The structural mill, however, does require gas in order to commence operations. Failure to get the licence would result in a “huge” loss of income and opportunity for job creation, Evraz Highveld said.
Business rescue
Nersa said yesterday that companies required licences for the construction and operation of gas facilities as well as to trade in gas.
In the application, Evraz Highveld said the licence would reintroduce locally-produced steel in the market, which is currently being imported.
When it went into business rescue, Evraz Highveld was South Africa’s second-largest steel producer, after ArcelorMittal South Africa.
The company said the closure of its operations had had devastating consequences not only on the local communities of eMalahleni but on the economy of the country.
Sasol Gas would supply the gas, Evraz Highveld said.
The piped gas would be sourced from the Pande and Temane gas fields in Mozambique, while a portion would come from Sasol’s synfuels production facilities in Secunda.
Speaking on behalf of Evraz Highveld’s business rescue practitioners, Johan Burger yesterday said the company was still in negotiations with Sasol Gas about the gas supply agreement.
Burger said that in order to provide “the best dividend” to its creditors, the company was seeking opportunities to sell operating assets as a going concern. “In addition, restarting the structural mill could provide a significant number of jobs in the eMalahleni area.”
Evraz Highveld could be profitable at significantly lower volumes than were previously achieved, Burger said.
Asked if the company was not concerned that the conditions that led to its financial distress still persisted, Burger said Evraz Highveld could operate under difficult market conditions because of significantly lower fixed costs.
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