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Highveld Enters into Black Economic Empowerment Transaction
04/10/2009 - Evraz subsidiary Highveld Steel and Vanadium will transfer 26% of the ordinary equity interest in Mapochs Mine to local partners as part of South Africa’s Black Economic Empowerment government program.
Evraz Group subsidiary Highveld Steel and Vanadium Corp. Ltd., South Africa, has concluded an agreement to transfer 26% of the ordinary equity interest in Mapochs Mine (Proprietary) Limited to local partners. The agreement, part of the Black Economic Empowerment (BEE) government program, was signed in order to comply with South African legislation for the mining industry.
Upon fulfillment of a number of conditions, Mapochs Mine—presently an independently managed division of Highveld—will be transferred into Mapochs Newco, a subsidiary of Highveld. Conditions include conversion of the old order mining rights, and the consent of the Minister of Minerals and Energy for the transfer of the converted new order right to Mapochs Newco.
The parties have agreed on share disposal restrictions and certain empowerment status undertakings to secure mutual interests in Mapochs Mine, the BEE transaction and the conversion of Highveld’s old order mining rights in respect of the Mapochs Mine.
Valued at US$59.8 million, the two-part transaction comprises:
- Sale of 23% equity interest in Mapochs Newco to Umnotho Iron and Vanadium (Proprietary) Limited, a subsidiary of Umnotho weSizwe Group (Proprietary) Limited; and
- Transfer of 3% equity interest in Mapochs Newco to the Mapochs Mine Community Trust
The effective date of the BEE transaction will be the later of 1 July 2010 and the last business day of the calendar month in which the necessary conditions are fulfilled.
Black Economic Empowerment (BEE) is a program launched by the South African government to redress the inequalities of Apartheid by giving previously disadvantaged groups economic opportunities previously not available to them. It includes measures such as employment equity, skills development, ownership, management, socio-economic development and preferential procurement.
Mapochs Mine produces lumpy titaniferous magnetite ore (supplied exclusively to Highveld’s steelworks) and fines ore (supplied exclusively to Vanchem Vanadium Products (Proprietary) Limited for the production of a variety of vanadium products).
Highveld Steel and Vanadium Corp. Limited, an integrated mining, vanadium, and steel producer, is South Africa's second-largest steelmaker and a leading vanadium-slag supplier. Highveld is the primary producer of medium and heavy structural sections and thick plate in South Africa. Evraz holds an 85% equity stake in Highveld.
Umnotho weSizwe Group (Proprietary) Limited is a BEE investment holding company with interests in the mining and minerals sector, with strong, proven mining experience and expertise. Active in the resource sector since its formation in 1997, the group is a manger and developer of its own projects and holds a variety of mining and exploration rights in both base and precious metals, which it is in the process of exploiting.
Mapochs Mine Community Trust was established by Highveld to enable the communities surrounding the Mapochs Mine to benefit from the broad-based socio-economic empowerment ownership initiatives of Highveld. With a key focus on supporting socio-economic development, the beneficiaries of the Community Trust will include people from the community surrounding the Mapochs Mine, Roossenekal and other areas that send labor to Mapochs Mine.
