Photo by: Duane Daws
After earlier this week confirming that it had temporarily ceased steel production at its steelworks, citing working capital constraints and reduced domestic demand, Evraz Highveld Steel and Vanadium on Tuesday said it had issued a proposed restructuring notice in terms of Section 189 that could see the country’s second-largest steelmaker potentially cutting half of its workforce.
The group, which initiated voluntary business rescue proceedings in April, would now enter a 60-day Commission for Conciliation, Mediation and Arbitration-facilitated consultation process with employees and trade unions.
Evraz Highveld planned to restructure to a “curtailed operating mode”, which would allow start-up on a limited basis when market conditions improved and adequate funding was obtained.
Responding to the announcement, trade union Solidarity, which claimed to represent around 400 of Evraz Highveld’s 2 242 employees, said it would participate in the consultation process to mitigate the impact on its members.
The union said it had already sent a letter to South Africa’s largest commercial banks requesting them to “show consideration” for the financial difficulties currently being experienced by Evraz employees.
It further called for an urgent industry-wide intervention in the metals industry to avoid the retrenchment of “thousands of workers”.
“In the coming weeks, the trade union will hold probing discussions with various role-players in the metals industry to explore solutions for the crises currently experienced in the industry.
“Among other things, we will propose that the local manufacturing sector and construction industry make use only of domestic steel to support the local steel industry.
“In addition, we will also propose that the steel industry should be exempted from winter electricity tariffs while the industry is recovering,” commented Solidarity deputy general secretary Johan Kruger.
It, meanwhile, confirmed that it had received a number of indicative offers to invest in the company, with prospective bidders required to provide the necessary guarantees by July 27 to proceed to the next stage of the bidding process.
The vertically integrated steel and vanadium slag producer cited its inability to meet its short-term obligations as a result of historical operating difficulties and sustained financial losses within a capital-constrained operating environment as the catalysts for it entering business rescue proceedings earlier this year.