JOHANNESBURG (Business Day) -- Several companies had approached Anglo American [Nasdaq:AAUK; LSE:AAL] for its 79% stake in Highveld Steel & Vanadium Corporation [Nasdaq:HSVLY], Highveld said yesterday.
Anglo American said last year that it would sell Highveld and other noncore businesses to concentrate on mining.
In a statement to the JSE, Highveld said Anglo American had appointed advisers for the sale and that nonbinding bids from a number of companies had been received.
“Participants in this process will start their due diligence investigations in the coming weeks,” it said.
The company had appointed a group of independent directors to advise it on the proposed sale. The committee had appointed Standard Bank to carry out a valuation once a final and binding bid had been received.
The sale of Highveld has sparked speculation about likely new owners.
Steel producer Mittal Steel SA, owned by steel giant Mittal [NYSE:MT], has said it might consider buying Highveld but group spokesman Thami Didiza declined to comment.
Indian conglomerate Tata said last year that it was keen on Highveld as it wanted to expand its steel production.
Highveld CEO Andre de Nysschen said yesterday that he could not comment.
It is not known how much Anglo American wants for Highveld, but a group of steel analysts said late last year that the price could be between $986.6 million and $1.64 million.
Anglo American plans to sell Highveld at a time when the company is riding the crest of a wave on high vanadium prices.
Highveld headline earnings for the year to December 31 more than doubled, mainly because of high vanadium prices and global supply constraints.
Vanadium prices reached a record high in the first quarter of last year.
Vanadium is a white soft metal used in x-rays and in the manufacture of alloys. Highveld accounts for a quarter of the world’s total vanadium production.
Headline earnings increased from the previous corresponding period’s $142.4 million to $279.6 million. Headline earnings a share soared from $1.44 in 2004 to $2.86. Revenue was up from $822.4 million to $1.18 billion, while operating profit increased from $164.5 million to $460.5 million.
Profit attributable to shareholders increased from $122.5 million to $312.4 million.
Total dividends, including a special dividend and final dividend of 66 cents, will increase from the previous year’s 72 cents to $4.65 cents.
Highveld said that while the demand for vanadium was expected to remain stable in the new financial year, last year’s high prices were unlikely to be repeated.
Global steel demand was likely to remain weak in the new year.
De Nysschen said he was not worried about the gloomy outlook in the global steel market. He said between 50% and 60% of the company’s steel production was sold locally.
“The local market is looking good at the moment because of all the construction and industrial projects, the 2010 Soccer World Cup and government’s plans to push economic growth beyond 6%,” he said.
Major international steel producers had announced intentions to cut back on production, he said, “and that should improve the global steel situation”.
Highveld’s share price yesterday gained a marginal 0.31% to close at $16.01 a share on Nasdaq.
