Evraz halts steel production – 2 242 workers face an uncertain future
Evraz Highveld Steel (Highveld) has temporarily ceased production of steel making at its steelworks.
This was primarily as a result of working capital constraints and reduced domestic demand in steel mainly due to a significant increase in Chinese imports.
“We are currently communicating with our employees and it is our intention to resume production once adequate funding has been secured and steel trading conditions have improved to ensure sustained future financial viability,” was a statement send out by Brunswick South Africa on behalf of Highveld.
As a result of the temporary closure, Highveld reviewed its position and has issued a proposed restructuring notice in terms of Section 189, which will require a 60 day consultation process with employees, trade unions, facilitated by the Commission for Conciliation, Mediation and Arbitration, regarding a possible reduction of approximately 50% in the workforce. The company will restructure to a curtailed operating mode, which will allow a start-up on a limited basis when market conditions improve and adequate funding obtained.
Business Rescue is still ongoing, with the publication date of the business rescue plan being August 31.
It was decided to cease production of the iron making division of the company, which was necessitated by amongst others delayed debtors payments, inadequate cash to procure the required raw materials to continue with manufacturing operations; difficulties experienced with access to funding; and continued inability to pay major creditors timeously. Sustainable operations are not viable at current low demand and poor selling prices.
Feeding of raw materials to the iron making kilns was stopped, such that the furnaces can be safely drained and switched out, ready for a future start up. The steel plant will be stopped and made safe once all the hot metal has been processed. The two mills will continue operating, until all the available stocks have been rolled into saleable products, where after these operations will also be safely stopped. All plant and equipment will for the moment be placed in care and maintenance and prepared for future start up.
“It is the intention of the company to resume production once adequate funding has been secured and steel trading conditions have improved to ensure sustained future financial viability,” a statement on their webpage read.
The company is continuously reviewing its position and possible future proposals with regards to employees and will keep shareholders informed of its future intentions.
This is how Evraz Highveld’s history unfolded:
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