JOHANNESBURG (Business Day) -- Highveld Steel [Nasdaq:HSVLY] produced a solid set of results last week on the back of high vanadium prices. But there are warning signs that the party might be coming to an end.
While prices peaked earlier in the year last year because of global supply difficulties, they had started to decline by the end of the year. With the vanadium prices seemingly coming off the boil, Anglo American's [Nadaq:AAUK; LSE:AAL] departure seems particularly well timed.
Highveld agrees that it would not be able to repeat last year's performance.
Given the depressed state of the global steel market, vanadium is important to Highveld, accounting for a big chunk of its revenue over the past year, and potential bidders for Anglo's stake will be watching it.
News of Anglo's decision to dispose of Highveld and the soaring vanadium prices were responsible for the sharp rise in Highveld's share price. Perhaps with prices likely to stabilise this year, that will also be reflected in the share price, which has risen so much that it might deter other potential buyers.
Steel producer Mittal Steel SA [NYSE:MT], Indian conglomerate Tata and, more recently, Russian magnate Alisher Usmanov, are among those believed to have put their names in the hat for Anglo American's 79% stake.
Highveld said last week that Anglo American had received a number of nonbinding bids for Highveld. But little is known about these bidders and Highveld has not said much about the matter, save to confirm that due-diligence investigations will be under way soon.
