Evraz Highveld doubts its viability in Johannesburg

Evraz Highveld Steel & Vanadium limited, the South African unit of the largest steel company in Russia, experienced the largest drop in Johannesburg in 3 weeks, after which she said she was not able to stay in business.

The Evraz Highveld shares fell by as much as 11 percent, which designated the largest intraday decline from July 31. Labor conflicts, a drop in steel prices explain the company's statement about losses in the first half of the year. The company is struggling to restore profitability after economic stagnation, competing with other steel producers.

"There are questions that can cause serious doubts about the company's ability to continue activities in the foreseeable future," the Evraz Highveld statement said. Metallurgy of South Africa can produce about 7 million tons of steel per year, exceeding the demand of about 5.4 million tons. "In the absence of sustainable growth in the main infrastructure expenses of the government, the internal demand for steel is expected to remain a little lower than GDP," says Evraz Highveld.

The annual growth of the domestic product in South Africa amounted to 0.9 percent in the first quarter of 2013, becoming the lowest since 2009. Evraz Highveld and the National Union of Metallurgists of South Africa are currently negotiating wages, as the company said. The Russian maternal company Evraz PLC (EVR) is also negotiating 85 percent of its shares for $ 320 million, as the statement said.