JSE-listed steel group Evraz Highveld Steel & Vanadium on Tuesday reported an operating loss of R89-million for the three months ended March, as opposed to a profit of R50-million during the prior corresponding period, mainly owing to a combination of lower saleable production and limitations on steel dispatches.
Earnings before interest, tax, depreciation and amortisation for the quarter amounted to a loss of R15-million compared with a profit of R124-million previously. However, the company’s revenue derived from the sale of goods increased to R1.55-billion from R1.41-billion during the prior corresponding quarter.
Evraz’s steel sales volumes increased by 2% during the period to 138 207 t, with domestic steel sales having declined by 17% to 110 765 t and export steel sales volumes growing to 27 442 t from 1 281 t during the prior corresponding period.
Ferrovanadium sales for the quarter increased by 26% to 1 370 t of vanadium compared with 1 084 t for the first quarter of 2013. Domestic vanadium slag sales amounted to 90 t of vanadium for the period compared with 104 t previously.
“There is visible change in the market purchasing trends from imports to domestic supply, combined with notable progress towards production improvement and labour stability,” Evraz said, adding that the company remained alert to these market conditions and risks.
The company’s lump ore production declined by 22% during the quarter from 375 514 t during the first quarter of 2013 to 293 270 t for the period under review, with fines ore production also having declined by 15% from 164 220 t to 139 469 t.
Evraz said output had suffered as a result of major repairs performed on the primary/top section of its crushing facility.
The company also stated that pit mining, at Evraz’s Mapochs opencast mine, in Limpopo, was expected to start during the next quarter, following the completion of a pit mining trial.
Meanwhile, Evraz’s iron output declined by 13% during the period under review to 152 246 t, owing to its Furnace 2 only having been brought into production in March.
Steel output also decreased by 15% from 175 397 t, in 2013, to 149 623 t, as a result of decreased iron availability and lower scrap ratios.
Further, a total of 10 959 t of vanadium slag was produced during the quarter containing 1 435 t of vanadium, compared with 12 057 t slag containing 1 627 t vanadium previously.
Evraz further said while it continued to use credit lines that were only committed to December 31 and which were already fully drawn, management continued to take significant steps to mitigate this risk.
Meanwhile, Evraz said it remained under cautionary with regard to the pending sale of 85.11% stake in the company.
“The negotiations with potential bidders remains incomplete, confidential and nonbinding, with no definitive certainty that a transaction will take place,” the company said.