Jindal Steel Group will acquire a 100% stake in Vitkovice Steel, says the Czech plate maker.
“This is a strategic step and we are convinced that it will strengthen the company and the Czech steel industry. The new industrial owner will bring the company stability and above all development in the form of massive investments in modernisation and expansion of production technologies, sharing of foreign know-how and moving towards environmentally produced low-emission steel,” Vitkovice Steel chief executive Radek Strouhal says in a note seen by Kallanish.
Earlier this year, Vitkovice Steel signed a memorandum of understanding with prospective Omani low-emission steelmaker Vulcan Green Steel, part of Jindal Steel Group, for the future supply of 1 million tonnes/year of slab (see Kallanish passim). The Czech rolling mill has been cooperating with Jindal for more than a year in the field of operational financing, it says.
“We see great synergies between Jindal Group and Vítkovice Steel. We want to be a strategic investor and develop and expand production in Ostrava,” says Harssha Shetty, chief executive at Oman-based Jindal Shadeed Iron & Steel and Vulcan Green Steel executive director marketing.
Jindal plans to invest up to €150 million ($164m) in the development of the Ostrava-based mill in the coming years, mainly in the expansion of plate production capacity and output of higher-added-value products.
A prerequisite for the acquisition was the completion of the Czech Financial Analytical Office’s investigation into Vitkovice Steel’s alleged links with Russia. The probe was closed and preliminary restrictions on the handling of the company’s shares and funds were revoked (see Kallanish passim).
The acquisition is subject to review by the Czech competition office.
It would represent a significant foreign investment into European steelmaking at a time when European economic growth and steel demand is suffering miserably. However, plate demand is touted to have a brighter future than most other steel products due to investments in renewable energy and defence. The leasing/sale of plate mill Liberty Czestochowa in neighbouring Poland has garnered interest from multiple potential investors.
Adam Smith Poland