South African plant Roman Abramovich was under threat of closure


Temporary administrators of troubled South African Evraz Highveld Steel & Vanadium can close this foundry, according to Bloomberg. This will lead to the dismissal of an order of 2,2 thousand employees of the enterprise.

In July 2015 Evraz Highveld announced the suspension of steel production due to the shortage of working capital and the fall in domestic demand for steel amid increasing Chinese imports. Since then, the company has repeatedly renewed production and again stopped. Last year Evraz has agreed to support unemployed workers, but at the beginning of February 2016 payments stopped, said a source close to Evraz Highveld. He confirmed the information about the possible closure of the company, adding that it is likely to be subsequently sold in parts.

The main reason for the closure of the plant — the falling demand for steel. Due to the fall in demand for steel, primarily in China, by the end of 2015, according to Severstal, the prices have reached the lowest level in the past 12 years and lost since the beginning of the year to 34%.

The main shareholder of Evraz Highveld (85,1%) Evraz is Roman Abramovich, Alexander Abramov and Alexander Frolov. Evraz started buying shares of Evraz Highveld in 2006, subsequently bringing the percentage to 85.1%. In General, for a share in the South African assets of the Russian company paid $678 million But since 2010, the company generated only losses (by the end of 2014 net loss was $131 million). In April 2015 Evraz Highveld came under the management of external managers and held a delisting from the Johannesburg stock exchange (JSE), at the same time Evraz has deconsolidated South African asset.

Evraz Highveld is a vertically integrated company for the production of vanadium pig iron and steel. Takes the second place in terms of steel production in South Africa, is one of the world leaders in supply of vanadium. In 2014 the company produced 621 tons of steel and more than 6 thousand tons of vanadium, but on revenue of$544 million received $131 million net loss.

Evraz since 2013, trying to sell the asset. In March 2013 the company signed a non-binding agreement to sell 85% stake in Evraz Highveld to a consortium of local investors Nemascore for $320 million, but the deal fell through. In August 2014, Evraz sold South African Macrovest 147 Proprietary 34% of Evraz Highveld for $27 million, but a year later the deal was cancelled at the initiative of the Board of Directors of the buyer.

In April 2014, the external managers have developed the plan of salvation Evraz Highveld, later was found a buyer — Chinese International Resources Project. The transaction amount was estimated at $28 million, But Evraz, the plan did not like because of the lack of information about the competence of the buyer in the steel industry, said the source . In October 2015 he appealed against the deal in the High court of South Africa, and in early 2016 International Resources Project itself refused to buy.

In late January, Evraz announced the suspension of another foreign asset — “Evraz Caspian Stal” in Kazakhstan (Evraz owns 65% of shares). The reason is the same — weak demand for steel products.

Contact a representative of Evraz Highveld failed (company website), an Evraz representative on the request is not answered.