Pretoria - Evraz Highveld Steel and Vanadium on Thursday said it had signed a manufacturing agreement contract with ArcelorMittal South Africa (Amsa) in a bid to resuscitate its heavy structural mill after it was put under business rescue.
The distressed Russian-owned Highveld Steel’s South African unit nearly shut shop earlier this year after a deal to get a new owner failed to materialise and the Department of Labour suspended the payment of a training allowance on behalf of some employees.
This forced the steelmaker’s operations to be put under business rescue, placing more than 2100 jobs at risk.
In terms of the agreement, which is still subject to certain conditions precedent, Amsa would supply blooms for processing into heavy structural steel to Highveld’s newly-formed subsidiary, Highveld Structural Mill (HSM).This would result in the re-opening of its heavy structural mill, thus making available the supply of locally produced South African large structural steel products into the market again.
“The re-opening of the mill is a positive development and will result in the added benefit of creating further jobs,” Highveld said. “The agreement will operate for an initial period of two years with an option to extend for a further period of one year.”
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ArcelorMittal also has an option to purchase the business of HSM and the land or the shares in HSM, subject to certain further regulatory and governance approvals. Highveld said the detail regarding implementation was being finalised, but it was envisaged that the mill would begin operations in 2017.
Evraz Highveld Steel mines titaniferous magnetite ore at its Mapochs Mine operation at Roossenekal, Limpopo, about 140km north east from Witbank.
Its structural mill offers rolled steel profile products, such as universal columns, parallel flanged beams, channels, angles, rounds and billets.