STALLED: Workers at the Evraz Highveld steel plant in Emalahleni. Picture: SUNDAY TIMES
STALLED: Workers at the Evraz Highveld steel plant in Emalahleni. Picture: SUNDAY TIMES

EVRAZ Highveld Steel & Vanadium confirmed on Friday that it had sent trade union Solidarity a letter from management informing it that Hong Kong-based Chinese company, International Resources, would no longer buy the ailing steel producer.

SA’s second-largest steelmaker said conditions precedent within business rescue proceedings had not been met on time. The union had said earlier on Friday the news threatened the jobs of about 400 of its members.

The company had employed a workforce of about 2,300 during full production, and about another 1,000 contractors, before entering business rescue in April last year. It confirmed on Friday it still employed about 1,800 people, after shutting down operations in July last year.

“I think the International Resources plan was the best we had,” Highveld CEO Johan Burger said on Friday. “But we have not been resting on our laurels and have been working on an alternative plan (to save the company). We are putting the final touches on that.”

He said details of the alternative plan were “very sensitive”, and would be presented to creditors in about two week’s time.

Highveld’s creditors had accepted a R350m offer by International Resources to buy about R1.2bn of the steel maker’s debt in two tranches.

But a subsequent audit letter from the South African Revenue Service (SARS) indicated that the steelmaker owed tax worth R680m between 2007 and 2009, and this had further complicated a potential sale, along with stringent and costly environmental issues.

Marius Croucamp, Solidarity deputy general secretary, said on Friday that Highveld’s management had indicated in the letter that International Resources did not comply with the provisions of the business rescue plan underpinning the sale.

“Unless Highveld’s management soon finds another buyer, or obtains sufficient funding to get the mill going again, the company — in terms of the bailout plan — would have to sell off its assets,” he said.

Croucamp said Solidarity would support its members affected by the process by ensuring, among other things, that in going forward, the company follows correct procedures.

He said most of Highveld’s workers were already undergoing retraining as part of a training layoff scheme, offering them temporary income.

Meanwhile, Solidarity would be in regular talks with the company mitigate as far as possible the impact on its members.