Business, Politics, and Analysis

search
April 16, 2018 6:04 pm | FILED UNDER: business

Chinese Among Potential Buyers Of ArcelorMittal Ostrava Steelworks

By ČTK

Prague, April 16 (CTK) – ArcelorMittal Ostrava (AMO) steelworks, which ArcelorMittal multinational steel group plans to sell, should find a new owner without problems, analysts addressed by CTK today said.

 

Thanks to the steelworks’ profitability, the risk that the company, which with subsidiaries has almost 7,000 employees, would be closed is very low, they said.

 

Among potential buyers are in particular large multinational companies, also from China.

 

Industry and Trade Minister Tomas Huner has invited ArcelorMittal Ostrava (AMO) steelworks CEO Ashok Patil and other top management members to meet with him on Tuesday to discuss the potential sale of AMO. The meeting will also be attended by trade union representatives.

 

Trade union leader Josef Stredula has criticised potential sale of the steelworks, he earlier stressed that the potential transaction must not endanger employment in the region.

 

“The Ostrava steelworks should be attractive for investors. Chinese steel giant He Steel considered acquisition of US Steel Kosice last year but the deal failed in the end,” Cyrrus chief economists Lukas Kovanda told CTK.

 

“The Ostrava steelworks could be a suitable compensation for He Steel. The accommodating approach from the top Czech political circles to Chinese capital is also favourable for the acquisition,” he added.

 

Besides the Chinese steelworks, Japanese and European steel makers could also show interest in AMO, said Finlord analyst Boris Tomciak.

 

“The price for the steelworks will be in billions or tens of billions crowns,” he said.

 

Tomciak does not think that closing of the steelworks is likely in the coming future. “The company’s profitability is acceptable so it would not make sense for the new owner to close the steel mills and thus lose an asset which generates profit,” he added.

 

AMO made a Kc1.308bn net profit in 2016 and its sales amounted to Kc28.786bn. It produces more than two million tonnes of steel mainly for construction and engineering a year, exporting its products to over 40 countries.

 

“With respect to the development of the economic environment, a profit can be expected also this year,” said analyst Petr Hlinomaz.

 

The former Nova hut is a member of Laskhmi Mittal group since 2003. Parent ArcelorMittal is the biggest steel producer in the world, it has roughly a 6 percent share in the total global steel production and is active in over 60 countries.

 

ArcellorMittal said on Friday that among the plants the group wants to sell as a compensation in connection with the purchase of Italian steel producer Ilva are AMO, Romanian Galati and Italian Piombino, as well as ArcelorMittal Skopje, Luxembourg’s ArcelorMittal Dudelange and operations in Liege, Belgium.

 

In connection with the acquisition of Ilva, ArcelorMittal has had to submit a compensation package to the EU in order to dispel concerns about a breach of competition rules, AMO spokeswoman Barbora Cerna Dvorakova said earlier.

 

Ilva is the biggest steelworks in Europe in terms of production capacity. The EC should decide on the issue by May 23, it does not comment on the case at the moment.

%d bloggers like this: