Steel manufacturer ArcelorMittal South Africa (AMSA) has concluded a contract manufacturing agreement with embattled Evraz Highveld Steel & Vanadium (Highveld) and its HSM subsidiary, whereby AMSA would supply blooms and slabs to HSM for processing into heavy structural steel.
This will result in the reopening of the Highveld heavy structural mill, thus making available the supply of locally produced South African large structural steel products into the market again.
It is also dependent on the implementation of duties on the products to be manufactured in the heavy section mill, and the application that has been submitted to the International Trade Administration Commission (ITAC) in this regard will need to be finalised.
“The reopening of the heavy section mill is a positive development and will result in the added benefit of creating further jobs,” Highveld, which is currently in business rescue, said in statement on Thursday.
The agreement will operate for an initial period of two years with an option to extend for a further period of one year.
AMSA also has an option to purchase HSM’s business, and land or shares, subject to certain further regulatory and governance approvals that may be required.
The detail regarding implementation is being finalised but it is envisaged that the heavy sections mill will start operations in 2017.