Evraz subsidiary Highveld’s net profit drops sharply in 2009

Wednesday, 24 March 2010 16:41:33 (GMT+3)   |  
       

In 2009, Highveld Steel and Vanadium Corporation Ltd (Highveld), a South African mining, vanadium and steelmaking subsidiary of the Russian mining and steel producer Evraz Group, saw its net profit drop sharply to ZAR 164 million ($22.2 million) from ZAR 2.606 billion ($352.6 million) in 2008, while its revenue decreased by 47 percent year on year to ZAR 4.252 billion ($575.3 million).

In 2009, Highveld was affected by a fall in vanadium prices, which dropped from $26/kg at the beginning of 2009 to a low of $18.96/kg in May, recovering to $32/kg at the end of the year. The average vanadium price achieved during 2009 was $25.34/kg. Meanwhile, in 2009, the company's vanadium in vanadium slag output went down by 20.5 percent to 6,190 mt, its steel output decreased by 12.2 percent to 699,000 mt and its rolled steel product output dropped by 8.8 percent to 602,000 mt, all compared to 2008.
 
"Despite a depressed steel market, a notable recovery is evident in the vanadium market since the year-end, with prices reacting to positive market demand," reads the company's statement.

Highveld noted also that, while the South African steel markets remain volatile, there are slow recoveries in prices and shipment volumes. "After some decline in the start of the year, steel prices appear to be stabilizing at present," the company commented.

However, rising energy and raw material costs will necessitate higher selling prices this year. With this happening, the negative impact of the rising energy cost would be partially mitigated.

Highveld also stated that revenue from its vanadium slag sales are expected to make a greater contribution to its profitability in 2010. "With international vanadium prices having bottomed out in the first quarter and continuing their positive trend, we anticipate our vanadium business to be substantially better than in the fourth quarter of 2009," reads the company's statement.


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