LNM Group, the world’s second largest and most global steel producer, and United States Steel Corporation (“U.S. Steel”), the world’s 6th largest steel producer, today announce the submission of their offer for the privatisation of Kriyviy Rih Mining and Smelting Plant “Kryvorizstal” (“Kryvorizstal”).
Ispat Karmet, a member of LNM Holdings operating in Kazakhstan, and Ispat Polska Stal, another member of LNM Holdings operating in Poland, are also members of the consortium.
LNM and U. S. Steel are two of the world’s leading steel producers, which collectively have combined worldwide steel production of approximately 60 million tonnes and annual coke production of approximately 20 million tonnes. Accordingly the joint offer reflects many years of industry experience, combined financial strength and an unprecedented track record in successful privatisation transactions around the world.
Having now carried out due diligence on Kryvorizstal, LNM and U. S. Steel have identified a number of ways in which they believe the plant can build on its current market and become one of Europe’s premier steel producers.
These would include implementing a significant capital expenditure programme aimed at:
- Maintaining social stability and investing in the local community
- Increasing sales both in volume and price terms
- Improving the product mix portfolio towards the higher value added products and introducing flat rolling operations
- Providing global market access, in particular exports to the European and Asian markets
- Increasing supply to the domestic market
- Ensuring EU compliance on environmental issues
The strong combined global presence of LNM and U. S. Steel can offer many benefits not only to Kryvorizstal and the Ukrainian steel industry, but also to the country’s economy as a whole. Successful privatisation to a leading international consortium would set a positive precedent for further privatisations contemplated by the Ukrainian Government.
Commenting, Lakshmi N. Mittal, Chairman LNM Group, said:
“Together with U. S. Steel we have submitted a very strong offer for Kryovorizstal. We have been impressed with the plant and believe that with the right international partner it has the potential to become one of the key global industry players. The LNM - U. S. Steel consortium is prepared to invest heavily in the plant and can provide the necessary expertise and access to global markets and technology to ensure it becomes one of Europe’s premier steel companies. We believe that we could increase production at Kryovrizstal to over 10 million tonnes per annum and successfully implement production of higher value added products. This would have long-term benefits to Kryvorizstal, its employees and the broader Ukrainian economy.”
“Social investment and our commitment to the employees of Kryvorizstal is a key component of our bid. LNM employs some 150,000 people around the globe and regards its employees as its most important asset. We would like to reassure the employees at Kryvorizstal that we envisage no reduction of jobs immediately following the company’s privatisation. The LNM – U. S. Steel consortium is committed to maintaining social stability and investing in the local community.”
“We are confident that the National Property Fund will not ignore the very strong credentials of LNM- U. S. Steel and will give our bid serious consideration. Selecting a consortium with the international credentials of LNM- U. S. Steel would send a very positive signal to other foreign businesses considering investing in the country. Commenting, U. S. Steel Chairman, Thomas J. Usher, said:
“Kryovirzstal and its employees would benefit greatly from the access to capital, technology and markets it would gain as part of the LNM – U. S. Steel consortium. Our collective experience and success in revitalizing former state-owned facilities and making them valuable contributors to their communities and nations is unequalled. And we have financially supported and aggressively pursued attracting new foreign investment to the communities and nations in which we operate. We believe that selecting the LNM – U. S. Steel consortium to privatise Kryvorizstal would send a strong message to the world community that the Ukraine is a good place to invest and conduct business.”
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