Johannesburg - Evraz [JSE:EHS] plans to apply for the local equivalent of bankruptcy protection as a slump in demand for the metal left it with insufficient funds.
Evraz Highveld Steel and Vanadium’s board filed a resolution to begin so-called business-rescue proceedings with the country’s companies regulator, the unit said in a statement.
Highveld appointed business-rescue officials, it said on Tuesday.
Evraz, partly controlled by billionaire Roman Abramovich, bought a quarter of Highveld from Anglo American [JSE:AGL] in 2006. It raised the stake to 85% the following year, paying more than a combined $678m for the transactions.
Moscow-based Evraz sought to sell the business in 2013 but failed to find a buyer as metals prices sank. The unit was hit by “weakened global steel and vanadium markets and a severe reduction of domestic steel demand,” Highveld said on Tuesday.
Vanadium and steel fell more than 20% in the past year.
Evraz said in August it had found a partner - Macrovest 147 Proprietary, led by Barend Petersen, executive chairperson of De Beers Consolidated Mines - to buy 34% of Highveld for R289m, and help develop the business.
That agreement has lapsed, the unit said in its statement. Evraz confirmed in a separate statement on Tuesday the proposed sale won’t be completed.
Its press service in Moscow wasn’t immediately able to comment beyond the statement.
Evraz shares fell 0.7% to 201.7 pence by 10:31.
Highveld, suspended in Johannesburg trading, had a market value of R164m at the close on Monday.