January Coverage Report
Sowetan Soccer
01 January 2016, p.108
Business Day,Companys and Markets
11 January 2016, p.5
Business Day,Companys and Markets
22 January 2016, p.6
Beeld Eienedomme &Veilings
29 January 2016, p.21
ONLINE
Bdlive-Business Day Live
11 January 2016
Articllink:http://www.bdlive.co.za/business/industrials/2016/01/11/sars-adds-to-evraz-
highvelds-troubles
AN AUDIT letter from the South African Revenue Service (SARS) indicating that SA’s second-largest
steelmaker owes tax worth R680m between 2007 and 2009 has further complicated its potential sale
to Hong Kong-based metals interests.
But the joint business rescue practitioners of Evraz Highveld Steel and Vanadium say despite the
"additional tax assessments" they "remain of the view" there is a reasonable prospect of rescuing the
company, even as it missed another business rescue proceedings deadline.
"(In November), the company received a finalisation of audit letter from SARS … whereof SARS advised
that it had finalised its audit in respect of the company’s income tax for the 2007 to 2009 tax period,"
Highveld said last week.
However, joint business rescue practitioners Piers Marsden of Matuson & Associates and Daniel
Terblanche of Mazars have formally requested SARS to provide "detailed reasons for reaching the
decision to issue the aforesaid additional assessments", as provided for in the Tax Administration Act.
In April last year, Evraz Highveld applied for its JSE listing to be suspended as it could no longer
continue as a going concern. Highveld’s creditors have accepted a R350m offer by Hong Kong company
International Resources Project to buy about R1.2bn of the company’s debt in two tranches.
Additional potential liabilities were earlier estimated to reach R1bn including for environmental
cleanup costs and taxation issues.
The SARS letter comes as the company’s London-listed parent has instituted several court challenges
in recent months to annul the sale. It claims the terms of disposal are not in the best interests of
Highveld nor the economic prospects of the Emalahleni region in which it operates.
The Russian-backed Evraz group in the UK initially challenged the fact that creditors of Highveld’s 74%-
owned Mapochs magnetite iron ore mine in Limpopo voted in favour of the mine’s separate business-
rescue plan. The mine supplies Highveld with vanadium-bearing ore and is seen as critical to the
company’s own business-rescue proceedings.
But Evraz later said amendments to the mine’s plan attended to its concerns and it dropped the
application.
The SARS bombshell comes after the South African Iron and Steel Institute, representing steelmakers
ArcelorMittal SA, Cape Gate and Scaw Metals Group, applied to the International Trade Administration
Commission of SA for an increase in duties on steel wire rod and reinforcing bar widely used in
construction materials.
Evraz Highveld has applied separately to the commission for an increase in the rate of customs duty
on structural steel.
SARS, the state-mandated Industrial Development Corporation and the National Union of
Metalworkers of SA have opposed the court proceedings instituted by Evraz subsidiaries East Metals
and Mastercroft to declare Highveld’s business rescue plan invalid.
The business rescue-practitioners also said that despite the Department of Economic Development
not being a party to this litigation, the entity had expressed its opposition to the main application to
invalidate the sale to International Resources Project.
Bizcommunity.com– Biz Community
12 January 2016
Article link: http://www.bizcommunity.com/Article/196/710/139222.html
An audit letter from the South African Revenue Service (SARS) indicating that SA's second-largest
steelmaker owes tax worth R680m between 2007 and 2009 has further complicated its potential
sale to Hong Kong-based metals interests
But the joint business rescue practitioners of Evraz Highveld Steel and Vanadium say despite the
"additional tax assessments" they "remain of the view" there is a reasonable prospect of rescuing
the company,even as it missed another business rescue proceedings deadline.
"(In November), the company received a finalisation of audit letter from SARS ... whereof SARS
advised that it had finalised its audit in respect of the company's income tax for the 2007 to 2009 tax
period," Highveld said last week.
However, joint business rescue practitioners Piers Marsden of Matuson & Associates and Daniel
Terblanche of Mazars have formally requested SARS to provide "detailed reasons for reaching the
decision to issue the aforesaid additional assessments", as provided for in the Tax Administration
Act.
In April last year, Evraz Highveld applied for its JSE listing to be suspended as it could no longer
continue as a going concern. Highveld's creditors have accepted a R350m offer by Hong Kong
company International Resources Project to buy about R1.2bn of the company's debt in two
tranches.
Additional potential liabilities were earlier estimated to reach R1bn including for environmental
cleanup costs and taxation issues.
The SARS letter comes as the company's London-listed parent has instituted several court challenges
in recent months to annul the sale. It claims the terms of disposal are not in the best interests of
Highveld nor the economic prospects of the Emalahleni region in which it operates.
The Russian-backed Evraz group in the UK initially challenged the fact that creditors of Highveld's
74%-owned Mapochs magnetite iron ore mine in Limpopo voted in favour of the mine's separate
business-rescue plan. The mine supplies Highveld with vanadium-bearing ore and is seen as critical
to the company's own business-rescue proceedings.
But Evraz later said amendments to the mine's plan attended to its concerns and it dropped the
application.
The SARS bombshell comes after the South African Iron and Steel Institute, representing steelmakers
ArcelorMittal SA, Cape Gate and Scaw Metals Group, applied to the International Trade
Administration Commission of SA for an increase in duties on steel wire rod and reinforcing bar
widely used in construction materials.
Evraz Highveld has applied separately to the commission for an increase in the rate of customs duty
on structural steel.
SARS, the state-mandated Industrial Development Corporation and the National Union of
Metalworkers of SA have opposed the court proceedings instituted by Evraz subsidiaries East Metals
and Mastercroft to declare Highveld's business rescue plan invalid.
The business rescue-practitioners also said that despite the Department of Economic Development
not being a party to this litigation, the entity had expressed its opposition to the main application to
invalidate the sale to International Resources Project.
Mineweb.com – Mineweb
12 January 2016
Articlelink:http://www.mineweb.com/news/industrial-metals-and-minerals/competition-
tribunal-to-hear-imerys-andalusite-case-today/
The Competition Tribunal will convene on Tuesday to hear arguments for and against the proposed
merger of Imerys South Africa and Andalusite Resources, which has raised objections from consumers
of andalusite that include the likes of ArcelorMittal, Scaw and Evraz Highveld Steel.
According to a Competition Tribunal press release, andalusite forms part of the alumina-silicates group
of compounds that possess heat resistant properties and are widely used in high-temperature
industrial processes eg in furnaces, kilns, crucibles, and ladles, which require refractories for steel,
cement, aluminum, and glass applications. With the exception of andalusite and chamotte, all other
alumina-silicates are not mined in South Africa and are imported from countries such as China, France,
Brazil, USA, Russia, Australia and Germany.
The Competition Commission will argue against the merger because the two parties are close
competitors and the transaction would remove the competitive dynamics between the two
companies and would lead to a situation where the merged entity will enjoy market power – the ability
to influence the price of the commodity.
The commission believes the proposed remedies that have already been deliberated on will not affect
the outcome
Bdlive.co.za– Business Day Live
22 January 2016
Articlelink:http//www.bdlive.co.za/national/2016/01/22/tribunal-to-hear-from-cape-gate-in-
wire-cartel-case
CAPE Gate chief operating officer Barend Nicolaas Coetzee will take the stand at the Competition
Tribunal on Friday in the Allens Meshco wire case.
One issue expected to be raised by Cape Gate is the dispute over the length of time the alleged
collusive tendering, price-fixing and market division took place. This could affect the penalties imposed
on the companies concerned.
In January 2007, the commission referred a cartel case to the tribunal against Allens Meshco,
Wireforce Steel Bar Hendok, Independent Galvanising, Galvwire and Meshrite, alleging that the
respondents directly or indirectly fixed a purchase or selling price in respect of lightly galvanised wire,
nails, wire and various wire products.
In July 2008, Consolidated Wire Industries (CWI), a subsidiary of Scaw, admitted that its employees
had participated in price-fixing meetings with their competitors Cape Gate, Allens Meshco and
Hendok. They agreed on a national price list for wire and wire products, on adjustments to the price
list and on collusive tendering of cable armouring wire. CWI applied for leniency.
CWI and Cape Gate are alleged to have also agreed not to target each other’s customers.
Evidence gathered by the commission confirms that, from 2001 to 2008, the respondents contravened
the Competition Act by engaging in price-fixing, market allocation and collusive tendering.
Polity.org.za – Polity
29 January 2016
Articlelink:http://www.polity.org.za/article/big-scrap-looms-over-proposed-new-scrap-export-
rules-2016-01-29
South African scrap merchants and domestic scrap consumers are taking strongly opposing positions
regarding proposed amendments to the price preference system (PPS) policy guidelines, which will
govern the future exportation of ferrous and nonferrous scrap metal. The proposed changes were
published by the International Trade Administration Commission of South Africa (Itac) in the
Government Gazette of December 11 and are open for public comment until February 5. The
amendments seek to align the PPS with the Second-Hand Goods Act and government’s black economic
empowerment policy, while also tightening up permit application and administration processes, right
down to a stipulation of the times at which PPS-related transactions can be concluded. In addition,
Itac has included a clause specifying that all metal scrap be exported through a single harbour, with
Port Elizabeth having been designated for the purpose. PUNITIVE & ONEROUS The Metal Recyclers
Association (MRA), which has over 100 scrap-dealer members representing 70% of the market by
volume, is objecting to the proposed changes, describing them as “punitive”. It has also written to
Economic Development Minister Ebrahim Patel requesting an urgent meeting to canvass alternatives.
MRA chairperson Quintin Starkey tells Engineering News Online that the PPS has been progressively
tightened since its introduction in 2013 and that the proposed changes will have serious unintended
consequences. They will result, he argues, in a further decline in scrap prices, which will place
additional pressure on its members, through continued job losses and business closures. The proposed
changes will also jeopardise the livelihoods of tens of thousands of informal scrap-metal traders – the
MRA estimates there to be 400 000 such traders, who support as many as 1.8-million dependants. He
says they are also inappropriate in the context of a yearly ferrous scrap surplus, which the MRA
estimates at between 1-million and 1.5-million – the domestic industry collects about 3.5-million tons
a year, of which the consuming industry only trades in 1.5-million tons. The “onerous” requirement of
insisting on all scrap being exported through Port Elizabeth would also add about R700/t to transport
costs, which would be passed on to the generators of scrap in the form of lower prices. The Road
Freight Association (RFA) also objects to the designation of Port Elizabeth as the sole port of export,
arguing that it could negatively affect the viability of hauliers. Road freight operators, the RFA argues,
are typically able to rely on a return leg from Durban when transporting scrap from the interior of the
country. However, there is now a serious risk of the return trip from Port Elizabeth becoming a “dead
leg”, which could result in some hauliers closing down. However, Itac spokesperson Foster Mohale
argues that a designated port has many benefits and will contribute towards the objectives of
improving the administration of the system. The proposed tightening of the PPS system – introduced
primarily to improve domestic scrap availability and facilitate a 20% to 30% discount to export prices
for local consumers – is broadly supported by scrap consuming industries, frustrated by the fact that
the PPS is currently being bypassed by the scrap sector. IN SUPPORT OF TIGHTENING Non-Ferrous
Metal Industries Association of South Africa chairperson Bob Stone tells Engineering News Online that
the majority of its members are supportive of a further tightening of the PPS guidelines, as there are
currently too many loopholes. Government introduced the discounts and a restriction that scrap could
not be exported before first being offered to domestic consumers in favour of introducing an export
duty, or banning scrap exportation entirely; a measure that has been introduced in a number of other
countries to shore up domestic supply. But Stone says he has yet to come across a member firm that
has successfully negotiated the discounts initially anticipated when the system was introduced. Scaw
Metals CEO Markus Hannemann adds that the proposed amendments should also be viewed in the
context of the overall objectives of the PPS, which is to ensure the “steady supply of quality scrap
material to local users at a price that is reasonable in order to support local industry”. Hannemann
argues that that objective is currently not being met and that the Itac intervention is designed to try
walk a middle road between an outright ban and continuing to sustain an export channel that is
aligned to the beneficiation goal. Scaw, therefore, supports the proposed changes and also believes
that the steel and engineering sector will benefit from the new policy, by securing current jobs and
levelling a playing field currently made uneven by the large scale export of quality scrap. Starkey
acknowledges that the PPS is not working as envisaged, but also questions whether it is the best
instrument for meeting government’s aims. CONSULTATION NEEDED? “Our appeal to government is
to have a proper roundtable consultation with all industry stakeholders on the proposed amendments
and the PPS system in its entirety,” he says, stressing that the MRA is keen to be part of a
“constructive” solution. “We need a platform through which to engage government and other
industries to find a solution to the problem.” Steel and Engineering Industries Federation of Southern
Africa (Seifsa) chief economist Henk Langenhoven says further dialogue is probably necessary, as the
proposals outlined in the Gazette do appear onerous. He also cautions that there are often negative
outcomes even when new regulations are well intentioned. He says Seifsa remains concerned about
the availability and pricing of scrap, which is affecting the competitiveness of domestic industry. “This
is an attempt to plug the holes and stop the circumvention of the initial guidelines,” Langenhoven
explains. “My worry, as an economist, is that the new rules are so onerous that it might stop
international trade completely.” Others are dubious about whether further dialogue will yield a
solution, particularly in the context of a material trust deficit that has developed, largely as a result of
what is perceived to be the scrap industry’s ongoing circumvention of the PPS. “Discussions on this
issue have been ongoing since around 1998. The conclusion in most of those meetings is that industry
needs assistance –we are becoming uncompetitive, we are closing, we are losing jobs,” Stone says.
“So we can go on talking for another 10 or 15 years, but by then the industry, which is already only
half of what it was, will be no longer . . . and we will become totally deindustrialised.” Itac’s Mohale
confirms that the reason for the proposed amendments is to improve compliance and enforcement.
“Improved, effective administration will support the objectives of the PPS to provide the necessary
input material which will ensure internationally competitive beneficiation of scrap metals by the local
consuming industry,” he says. Mohale says the notice forms part of the consultation process and
stresses that all comments will be “duly considered”. “Should a need for further information arise,
relevant parties will be approached. The recommendations will be submitted to the Itac for
consideration after which the amendments will bepublished.
Engineeringnews.co.za - Engineering News
29 January 2016
Articlelink:http//www.engineeringnews.co.za/article/big-scrap-looms-over-proposed-new-scrap-
export-rules-2016-01-29
South African scrap merchants and domestic scrap consumers are taking strongly opposing positions
regarding proposed amendments to the price preference system (PPS) policy guidelines, which will
govern the future exportation of ferrous and nonferrous scrap metal. The proposed changes were
published by the International Trade Administration Commission of South Africa (Itac) in the
Government Gazette of December 11 and are open for public comment until February 5. Print Send
to Friend 2 3 The amendments seek to align the PPS with the Second-Hand Goods Act and
government’s black economic empowerment policy, while also tightening up permit application and
administration processes, right down to a stipulation of the times at which PPS-related transactions
can be concluded. In addition, Itac has included a clause specifying that all metal scrap be exported
through a single harbour, with Port Elizabeth having been designated for the purpose. More Insight
Metals and engineering sector still under strain Metals and engineering sector still under strain
PUNITIVE & ONEROUS The Metal Recyclers Association (MRA), which has over 100 scrap-dealer
members representing 70% of the market by volume, is objecting to the proposed changes, describing
them as “punitive”. It has also written to Economic Development Minister Ebrahim Patel requesting
an urgent meeting to canvass alternatives. MRA chairperson Quintin Starkey tells Engineering News
Online that the PPS has been progressively tightened since its introduction in 2013 and that the
proposed changes will have serious unintended consequences. They will result, he argues, in a further
decline in scrap prices, which will place additional pressure on its members, through continued job
losses and business closures. The proposed changes will also jeopardise the livelihoods of tens of
thousands of informal scrap-metal traders – the MRA estimates there to be 400 000 such traders, who
support as many as 1.8-million dependants. He says they are also inappropriate in the context of a
yearly ferrous scrap surplus, which the MRA estimates at between 1-million and 1.5-million – the
domestic industry collects about 3.5-million tons a year, of which the consuming industry only trades
in 1.5-million tons. The “onerous” requirement of insisting on all scrap being exported through Port
Elizabeth would also add about R700/t to transport costs, which would be passed on to the generators
of scrap in the form of lower prices. The Road Freight Association (RFA) also objects to the designation
of Port Elizabeth as the sole port of export, arguing that it could negatively affect the viability of
hauliers. Road freight operators, the RFA argues, are typically able to rely on a return leg from Durban
when transporting scrap from the interior of the country. However, there is now a serious risk of the
return trip from Port Elizabeth becoming a “dead leg”, which could result in some hauliers closing
down. However, Itac spokesperson Foster Mohale argues that a designated port has many benefits
and will contribute towards the objectives of improving the administration of the system. The
proposed tightening of the PPS system – introduced primarily to improve domestic scrap availability
and facilitate a 20% to 30% discount to export prices for local consumers – is broadly supported by
scrap consuming industries, frustrated by the fact that the PPS is currently being bypassed by the scrap
sector. IN SUPPORT OF TIGHTENING Non-Ferrous Metal Industries Association of South Africa
chairperson Bob Stone tells Engineering News Online that the majority of its members are supportive
of a further tightening of the PPS guidelines, as there are currently too many loopholes. Government
introduced the discounts and a restriction that scrap could not be exported before first being offered
to domestic consumers in favour of introducing an export duty, or banning scrap exportation entirely;
a measure that has been introduced in a number of other countries to shore up domestic supply. But
Stone says he has yet to come across a member firm that has successfully negotiated the discounts
initially anticipated when the system was introduced. Scaw Metals CEO Markus Hannemann adds that
the proposed amendments should also be viewed in the context of the overall objectives of the PPS,
which is to ensure the “steady supply of quality scrap material to local users at a price that is
reasonable in order to support local industry”. Hannemann argues that that objective is currently not
being met and that the Itac intervention is designed to try walk a middle road between an outright
ban and continuing to sustain an export channel that is aligned to the beneficiation goal. Scaw,
therefore, supports the proposed changes and also believes that the steel and engineering sector will
benefit from the new policy, by securing current jobs and levelling a playing field currently made
uneven by the large scale export of quality scrap. Starkey acknowledges that the PPS is not working as
envisaged, but also questions whether it is the best instrument for meeting government’s aims.
CONSULTATION NEEDED? “Our appeal to government is to have a proper roundtable consultation
with all industry stakeholders on the proposed amendments and the PPS system in its entirety,” he
says, stressing that the MRA is keen to be part of a “constructive” solution. “We need a platform
through which to engage government and other industries to find a solution to the problem.” Steel
and Engineering Industries Federation of Southern Africa (Seifsa) chief economist Henk Langenhoven
says further dialogue is probably necessary, as the proposals outlined in the Gazette do appear
onerous. He also cautions that there are often negative outcomes even when new regulations are well
intentioned. He says Seifsa remains concerned about the availability and pricing of scrap, which is
affecting the competitiveness of domestic industry. “This is an attempt to plug the holes and stop the
circumvention of the initial guidelines,” Langenhoven explains. “My worry, as an economist, is that
the new rules are so onerous that it might stop international trade completely.” Others are dubious
about whether further dialogue will yield a solution, particularly in the context of a material trust
deficit that has developed, largely as a result of what is perceived to be the scrap industry’s ongoing
circumvention of the PPS. “Discussions on this issue have been ongoing since around 1998. The
conclusion in most of those meetings is that industry needs assistance –we are becoming
uncompetitive, we are closing, we are losing jobs,” Stone says. “So we can go on talking for another
10 or 15 years, but by then the industry, which is already only half of what it was, will be no longer . .
. and we will become totally deindustrialised.” Itac’s Mohale confirms that the reason for the proposed
amendments is to improve compliance and enforcement. “Improved, effective administration will
support the objectives of the PPS to provide the necessary input material which will ensure
internationally competitive beneficiation of scrap metals by the local consuming industry,” he says.
Mohale says the notice forms part of the consultation process and stresses that all comments will be
“duly considered”. “Should a need for further information arise, relevant parties will be approached.
The recommendations will be submitted to the Itac for consideration after which the amendments
will be published