A contract manufacturing agreement has been concluded between ArcelorMittal SA and Highveld Structural Mill (HSM) and Evraz Highveld Steel & Vanadium (Highveld). HSM is a newly formed subsidiary of Highveld.
The agreement relates to wind-down proposals by the joint business rescue practitioners in terms of a business rescue plan. The agreement is still subject to certain conditions.
In terms of the agreement ArcelorMittal SA will supply blooms to HSM for processing into heavy structural steel. This will result in the re-opening of the Highveld heavy structural mill. This will make available the supply of locally produced South African large structural steel products into the market again.
The re-opening of the mill is seen by Highveld as a positive development that will result in the added benefit of creating further jobs. The agreement will operate for an initial period of two years with an option to extend for a further period of one year.
ArcelorMittal SA 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 that may be required. Highveld said in a Sens statement that the detail regarding implementation is being finalised, but it is envisaged that the mill will begin operations in 2017.
It said this important milestone was made possible with the support of various stakeholders, for which it is grateful.
ArcelorMittal SA said in its own Sens statement it is dependent on the implementation of duties on the products to be manufactured in the heavy section mill. The application that has been submitted to the International Trade Administration Commission (ITAC) in this regard will need to be finalised.
This will result in the re-opening of the Highveld heavy section mill by the business rescue practitioner, making available the supply of heavy structural products into the South African market.
Trade union Solidarity said in a statement it welcomed the agreement that ArcelorMittal SA concluded with the Evraz Highveld Steel plant outside Witbank.
According to Marius Croucamp, deputy general secretary of the steel and engineering industry at Solidarity, HSM is the only plant on the African continent that is capable of producing structural steel of this nature.
Croucamp said the agreement comes as a positive development for the local community, as well as for the South African economy.
“Last year, this community was affected by mass retrenchments involving 1 753 employees. Not only will this agreement boost the local community, but it will also be an encouraging boost for the South African economy insofar as the country would manufacture its own structural steel,” said Croucamp.
“The number of employees that have to be appointed for the purposes of the agreement will be determined in the new year,” explained Croucamp.