London, England — 02 April 2013 – EVRAZ plc has signed a non-binding term sheet in respect of the proposed sale of its 85% stake in EVRAZ Highveld Steel and Vanadium Limited to the black economic empowerment consortium Nemascore (Pty) Limited, for an indicative cash consideration of approximately US$320 million.
Announcing this in a statement released here, the company said that it would use the sale proceeds for general corporate purposes.
EVRAZ Highveld is a vertically integrated iron ore steel and vanadium slag producer. Steel and vanadium slag are produced at the integrated steelworks situated in the eMalahleni area of Mpumalanga, with ore for the steelworks obtained from the Mapochs Mine in the Roossenekal area of Limpopo.
As at 31 December 2012, EVRAZ Highveld had gross assets of R3,667 million (approximately US$396 million). For the financial year ended 31 December 2012, the company produced a loss before tax of R898 million (approximately US$97 million).
The sale transaction will be the largest black economic empowerment transaction in the South African steel sector to date. It is subject to standard due diligence procedures and the conclusion of a formal agreement, the implementation of which will be subject to requisite regulatory approvals. The parties expect it to be executed and completed in the course of Q2 of 2013. They have agreed on a transition period during which EVRAZ will support the management of EVRAZ Highveld to ensure stable operations and a smooth transfer of the business.
“EVRAZ Highveld has always been an important investment of the company”, said CEO Alexander Frolov. “Our decision to divest the asset will allow us to enhance the company’s focus on our key steel markets in Russia and North America. The transaction will allow EVRAZ to further develop our strategies of continuous operational improvement and building a growing, vertically integrated business,” he added.
“We do not expect the transaction to affect EVRAZ’s leading position in the global vanadium markets,” he continued. “Our future growth in vanadium is based on an integrated business model that involves our assets in Russia, the United States, Europe and our remaining operations in South Africa. We plan to continue close collaboration with the future owners of the mill with respect to the vanadium business in South Africa,” Frolov concluded.
Source: Evraz. For more information, click here.