Evraz has signed a manufacturing agreement with ArcelorMittal.

JOHANNESBURG - Nearly 700 of the 1 800 jobs lost when the entire workforce of Evraz Highveld Steel and Vanadium was retrenched in February last year have been recouped through the resuscitation of part of the steel business, which is currently in business rescue.

This was confirmed yesterday (wed) by business rescue practitioner Piers Marsden during a Competition Tribunal hearing to consider the confirmation of a settlement agreement entered into between the business and the Competition Commission related to contraventions of the Competition Act.
Marsden said they had signed a contract manufacturing agreement for one particular part of the business, which had enabled them to take it from “zero jobs to about 700” in the past 18 months .

But Marsden said it had not been possible to resuscitate the business as a fully integrated steel and iron manufacturer but components within it had been successfully resuscitated.

Marsden stressed the importance of finalising the settlement agreement to “clean the slate” because any buyer who was interested in any of various business units would obviously want to see that no contingent liabilities existed.

He added that they had constant engagements with various players in government and various governmental organisations in an attempt “to preserve those 700 very hard fought jobs”

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Marsden said they had received support from the International Trade Administration Commission (Itac) in terms of price protection and also from the economic development department in trying to designate some of the steel products.

Marsden said there was an obligation in terms of the severance agreement signed with the two unions and non unionised staff at Highveld to offer jobs that became available to the previous employees and a large majority of the 700 jobs would have been made available to the previous employees.
Marsden said they had still not settled the full severance liability of the business from February last year but had been able to settle about R100 million of the about R330 million severance liability from a variety of these operations and businesses.

In terms of the settlement agreement, Highveld agreed to pay a fine of R1 million for price fixing and market allocation with ArcelorMittal South Africa (Amsa) between 1999 and 2009.

The tribunal last year confirmed a settlement agreement in terms of which Amsa agreed to pay a R1.5bn fine and committed to R4.6bn in capital expenditure over the next five years.

Korkoi Ayayee, appearing for the commission, said the anti-graft agency initiated a complaint in April 2008 against AMSA and Highveld and also cited the SA Iron and Steel Institute.

Ayayee said the commission found the two flat steel producers had an understanding in terms of which Highveld would follow Amsa’s lead on pricing, with this pricing practice was aided by extensive information exchange on volumes between the companies.

Ayayee said it further found that through the export monitoring committee of the institute, the firms reached an understanding on volumes of flat steel products that each of them exported to certain countries, which enabled them to divide export steel volumes between them.

Highveld did not admit that its conduct contravened the Competition Act. Jocelyn Katz, the legal representative for the business rescue practitioner, said there was no admission to the fact because they were unable to verify the detail.

“There is nobody around currently in the business who was involved at that time,” she said. Marsden said the company shareholder was a foreign entity and both the chief executive and chief financial officer had left the country long before his appointment. 

The tribunal confirmed the settlement agreement.

- BUSINESS REPORT