Picture: THINKSTOCK
Picture: THINKSTOCK

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DEFUNCT steel maker Evraz Highveld Steel and Vanadium will try to sell "parts or components" of itself to other entities.

This follows the retrenchment of about 1,750 workers last month, the remainder of an original workforce of nearly 2,300 employees.

Data show SA’s economic growth will possibly be less than 1% this year, deepening a slump in the mining and manufacturing sectors, which together make up about 20% of the economy. This increases the risk of a ratings downgrade.

Stephen Meintjes, an analyst at Momentum SP Reid Securities, said on Friday that although government had agreed to impose duties on steel imports "it seemed to be a case of too little, and too late".

"In general … a greater sense of urgency is required in terms of (Finance Minister) Pravin Gordhan’s call for business, labour and government co-operation to avoid a (ratings) downgrade."

Paolo Trinchero, CEO of the South African Institute of Steel Construction, said on Friday that the structural steel market was under "severe pressure".

"The current lack of work in construction, coupled with downturns in mining and manufacturing, makes it particularly challenging. If GDP (gross domestic product) falls below 2%, we have negative growth in the steel industry. A GDP growth rate of less than 1% means that the situation will remain for some time."

The retrenchments came after Highveld paid about R38m from its own pocket for a training layoff scheme that under the Department of Labour failed to sustain itself. The scheme involved departmental agencies including the manufacturing and engineering sector education authority and aimed at improving the skills of Unemployment Insurance Fund beneficiaries.

"(The department) let us down very, very badly. We had to … retrench all people from (CEO) Johan Burger to the factory floor," Piers Marsden of Matuson & Associates, one of Highveld’s business rescue practitioners, said last week.

"As a going concern, we are not looking to find a buyer. We have been through that process," Mr Marsden said, after a sale to Chinese metals interests in Hong Kong failed.

This means the assets of SA’s second-largest steel maker — which has not been producing steel since July last year — are likely to be sold off in pieces, or as standalone operations. Mr Marsden said there was a "lot of interest" in Highveld’s assets including its steel mills and furnaces.

The opposition Democratic Alliance (DA) said last week it had confirmed that Highveld would be "wound down", leaving families "without breadwinners".

"More troubling is that the Department of Labour failed to meet an agreement reached with Highveld to assist in retraining and reskilling the workers through the training lay-off scheme in order to prevent the job losses," Ian Ollis, the DA’s spokesman on labour, said. The training lay-off scheme was established by the department as an alternative to retrenchment for companies in distress. It was, therefore, unfathomable that it had failed to pay for the retraining of Highveld workers, given that the scheme had R3.3bn available in its budget.

"I will, therefore, request that the Minister of Labour, Mildred Oliphant, appear before the portfolio committee on labour to account for her department’s failure to prevent the retrenchments," he said.