NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » Mittals to buy Bulgarian steel plant

Mittals to buy Bulgarian steel plant

September 01, 2004 09:58 IST

The P K Mittal and V K Mittal-controlled Global Infrastructure Holdings Ltd is set to acquire a majority stake in Kremikovtzi AD, a 2.3 million tonne per anum steel plant in Bulgaria. GIHL is in talks to buy the stake from the existing promoters of the company, Finmetal Investitions GmbH.

Sources close to the development told Business Standard, "Global Infrastructure is currently negotiating with Finmetal to acquire a majority stake in Kremikovtzi. The discussions have reached the final stage but have not yet been concluded."

If GIHL acquires a controlling interest in Kremikovtzi, it will add another 2.3 million tonne per annum steel production capacity to the 10 million tonne capacity the Mittals control.

The investment required to acquire the majority stake is expected to be over $300 million, sources said. The deal will be structured in such way that a certain percentage of the investment would be made initially and the remaining payments would be made over a period of time, in phases.

Finmetal owns a 71 per cent stake in the company, while around 25 per cent is held by the government and the balance by some corporate investors. Kremikovtzi has a steel making capacity of 2.3 million tonne per annum, with a hot-rolled coil plant of 2.1 million tonne per annum.

The company also has cold rolling facilites of 1.3 million tonne per annum and a 1.2 million tonne per annum coke oven plant, along with galvanising and tinplate facilities and colour coated sheet mills. Kremikovtzi owns iron ore, dolomite and lime mines in the region.

Around 80 per cent of the compay's products are exported, with 65 per cent of exports going to European Union countries. GIHL will also be investing considerably to enhance the production capacity of Kremikovtzi.

GIHL recently entered into an agreement with the Nigerian government for a 10-year technical and management contract to take control of the 2.2 million tonne per annum Ajaokuta steel plant in Nigeria.

GIHL has appointed a managing director to begin operations at the plant. It has also applied for mining leases in the nearby iron ore mines.
Mansi Kapur in Mumbai