Evraz To Sell 85% Stake in South African Subsidiary

By Lukas I. Alpert

MOSCOW--Russian steel maker Evraz PLC said Wednesday it intends to sell its 85% stake in a South African subsidiary that suffered a labor dispute last year for $320 million to Nemascore (Pty) Ltd., a black empowerment consortium.

Evraz Highveld Steel and Vanadium Ltd. saw its 2,300 workers go on strike for four weeks in July and August of last year in a dispute over scheduling changes. Evraz said in a statement that the subsidiary had suffered a loss before taxes of approximately $32 million in 2012, but said it had gross assets of about $396 million.

Evraz said the deal, if it goes through, would be the largest black economic empowerment transaction in the South African steel sector to date. The company said the deal is subject to standard due diligence procedures and the conclusion of a formal agreement and regulatory approval. The deal is expected to be completed in the second half of this year.

"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," Evraz Chief Executive Officer Alexander Frolov said. "We plan to continue close collaboration with the future owners of the mill with respect to the vanadium business in South Africa."

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