German steelmakers thyssenkrupp Steel and Salzgitter have signed a framework agreement over their jointly owned mill Hüttenwerke Krupp-Mannesmann (HKM) in Duisburg.
Following intense negotiation that involved a former German state premier as mediator, the two groups have reached the terms over a transfer of tk Steel’s 50% stake to Salzgitter, effective 1 June. Salzgitter so far has held 40% in HKM, with the remaining 10% held by Vallourec, which has long declared that it wants to pull out of the joint venture. To become effective, the agreement between the bigger owners involves Vallourec, too, selling its stake to Salzgitter.
HKM, one of the biggest German slab mills with a potential capacity of more than 5 million tonnes/year of crude steel, has long been problematic for tk Steel’s parent thyssenkrupp AG. In its endeavour to make its steel division a separate independent company, HKM was a massive hurdle.
Salzgitter repeatedly signalled that it would continue with HKM if the stakeholders agree on conditions. HKM’s slab are used as pre-material for some of Salzgitter’s tube production. Salzgitter says it will continue operating HKM on a smaller scale.
One of HKM’s problems in the market is its slab prices, Kallanish is told by an experienced player. But with the EU’s market barriers and a shortage of imported slab ahead, HKM’s could soon see European re-rollers knocking, he says.
The announcement was sent out on Friday afternoon, followed by commentary from IG Metall. The union welcomes the news as “a good signal for HKM’s staff, for state North Rhine-Westphalia, and for steel in Germany.” The agreement “secures an important value-adding chain in our country, and beyond.” The union underscores that it appreciates that the parent groups have stood up to their responsibility for the employees. But the labour leaders note that a hard road lies ahead.
“Following difficult talks and disputes, the real work is starting only now,” says Thomas Hay, the representative of the employees on the supervisory board of HKM.
