Highveld plans to up output

Johannesburg - The R7.6bn steel maker Highveld Steel and Vanadium (Highveld) aims for 100% production in the second half of the year as it hopes to make up for earlier losses.

"It is anticipated that, subject to demand - particularly in the domestic market - the operational levels would be increased to full production during the later part of the year," said Walter Ballandino, CEO of Highveld Steel and Vanadium.

The group suffered from a lack of demand for steel and a bout of destocking by steel merchants in the first half of the year, but like other steel manufacturers expects to benefit from a second-half resurgence in the demand for steel.

According to the World Steel Association, crude steel production in South Africa was down 30.5% year-on-year in July to about 600 000 tonnes.

For its six months to end-June results, Highveld's gross steel production decreased by 35% compared to the same period a year ago.

From a demand point of view, a pullback in the demand for steel has also resulted in Highveld recording a headline earnings per share drop of 86% to 146.9c in the interim.

Operating profit before depreciation was R182m, falling from R2.01bn in 2008. A net cash outflow for the period of R533m dented cash available to R1.068bn (as at December 31 2008).

Total sales volumes decreased by 25% compared to the same period a year ago. According to the company, almost 100% of its casted products (blooms and slabs) were exported, an area which saw sales increase by 98% to 117 743 tonnes in 2009, year-on-year.

"Export sales increased dramatically and accounted for 53% of total sales, compared to 9% during the same period in 2008," the group said.

Vanadium slag production decreased by 44% to 18 280 tonnes and an average vanadium price of $22.56/kg was recorded in June, 16% higher than the lowest price for the period under review. Vanadium is used in steel alloys.

- Fin24.com