Metinvest eyes longs output restoration after DMK acquisition

Metinvest expects to expand the range of products by purchasing the Dneprovsky Iron and Steel Works (DMK) through its Dnieper Coke Plant (DKHZ) subsidiary, the Ukrainian steelmaker says.

Metinvest won an auction on Monday to acquire assets relating to the integral property complex of DMK in Kamianske for UAH 9.17 billion ($341 million), Kallanish notes. The auction was held in the ProZorro system and Dnipro Coke was the only participant. It won the tender by offering a price significantly higher than the starting one, Metinvest claims. The auction was held as part of DMK’s bankruptcy proceedings.

DMK’s property consists of the equipment necessary for the production of pig iron and steel products. The acquisition also includes the right to use the land and to work under licences and permits issued to DMK. About 9,000 plant employees will get a job at Dnipro Coke.

DMK was one of the largest steelmakers in Ukraine with a full-cycle metallurgical production facility. The capacities of its integral property complex include production of 3.9 million tonnes/year of crude steel.

“The purchase of DMK’s production complex will allow Metinvest to expand its product mix by effectively replacing production of square billets, wire rod, rebar and shapes, which used to be produced at an asset located on non-controlled territory of East Ukraine,” Metinvest says. “The acquisition will also provide Promet Steel, the group’s rolling mill in Bulgaria, with square billets for processing. DMK has also been one of the company’s top purchasers of iron ore and coke in Ukraine, which gives Metinvest additional synergies throughout the entire production chain.”

Metinvest received permission in May from the Antimonopoly Committee of Ukraine (AMCU) to partake in the auction for DMK (see Kallanish passim). Metinvest is a creditor of DMK.

The bankruptcy of DMK had been initiated in May 2019 as a result of a suit brought by one of its creditors. The total amount of the plant’s debts to various companies recognised by the Commercial Court of Dnipropetrovsk region is UAH 87 billion as at 26 July.

The sale of DMK’s assets at an auction was a required condition under the bankruptcy proceedings, aimed at preventing the shutdown of production and the liquidation of the company.

Svetoslav Abrossimov Bulgaria