ArcelorMittal said Monday it has completed the sale — to Liberty House Group — of seven steelworks and five service centers as part of the divestment package it agreed with the European Commission to secure the green light for its purchase of Italy’s largest steel plant, Ilva Group, now renamed ArcelorMittal Italia.
Steel and metals group Liberty House said it is embarking on a 100-day review of the businesses acquired and plans to restore the AM assets to full working capacity.
Assets sold include ArcelorMittal Ostrava in the Czech Republic, ArcelorMittal Galati in Romania, ArcelorMittal Skopje in Macedonia, ArcelorMittal Piombino in Italy, ArcelorMittal Dudelange in Luxembourg, and several finishing lines at ArcelorMittal Liege in Belgium.
The service centers are based in France and Italy.
According to an ArcelorMittal statement, the total net consideration for the assets payable to ArcelorMittal is Eur740 million ($838 million), of which Eur610 million was received June 28.
ArcelorMittal is required to deposit Eur110 million in escrow, which Liberty will use for certain capital expenditure projects as part of the EC approval process.
In an interview with S&P Global Platts, Jay Hambro, chief investment officer of GFG Alliance, parent of the expanding Liberty House group, said that “substantial cash has been set aside for development” of the former AM assets, which it aims to be “getting up to capacity.” The assets are in good condition generally, although they have suffered by being run by a monitoring trustee, appointed by the European Commission, rather than a steelmaker, during the few months of the transition period, the CIO said.
Hambro did not immediately confirm the time frame for reaching full capacity on the assets or what their recent production levels have been. Achieving full capacity makes sense for their successful operation, he indicated. “If you can produce profitably you should be expanding production,” he added.
Liberty aims to boost sales from these sites, with combined rolling capacity of more than 10 million mt/year and 6.3 million mt/year crude steelmaking capacity, by around 50% over the next three years, supplying steel to various European industries, the company said in a statement. The plan is to extend product range and explore opportunities to produce higher-quality steels with a more flexible production profile, it said.
The plan to regain full capacity at the assets comes against a backdrop of European Steel Association Eurofer’s forecast of a 0.4% downturn in European steel demand this year and announcements of production cutbacks by major producer ArcelorMittal and by US Steel at European locations.
“The cost of raw materials (iron ore and coking coal), is what is punishing steelmakers at the moment, causing pain to steelmakers as the margin has been contracted…We hope there will be a correction in raw materials prices or in steel prices,” Hambro said.
Liberty will adopt a “team collaboration” in its development of the AM assets, Hambro said. “We have kept most of the management…there is no material plan at the moment for any hiring or firing,” he said.
The acquisition of the AM assets “fits into the global pillar of Liberty” with its existing steelmaking assets in Australia, the UK and the US, Hambro said. The acquisition makes Liberty Steel one of the top 10 steel producers globally, excluding China, with a total rolling capacity of more than 18 million mt/year in a wide range of finished products.
Earlier this year Liberty said it was targeting crude steel capacity of some 20 million mt/year within five years.
— Diana Kinch and Annalisa Villa