Aug 20 2004
The LNM Group, the world’s second largest and most global steel producer, today announces that LNM Holdings N.V. has completed negotiations with the Government of the Federation of Bosnia-Herzegovina and the Kuwaiti Investment Agency to acquire 51% of BH Steel in Bosnia.
Under the terms of the agreement, LNM has agreed to:
- Increase the share capital of BH Steel by a total US$80 million
- Invest a minimum of US$135 million in a capital expenditure programme over the next ten years
BH Steel has a current annual production level of 200,000 tonnes and produces a variety of long products, including forgings, bar and rod. LNM is confident that the production capacity of BH Steel can be substantially increased by the implementation of the capital expenditure programme, which will include restarting the integrated production route at BH Steel, commissioning of the electric arc furnace production, modernisation of the remaining facilities and essential improvement of the existing product portfolio.
LNM believes that its investment will result in a number of positive benefits for Zenica, its community and economy. LNM has stated its intention to retain the current 2,850 active employees of BH Steel. Further recruitment is expected as BH Steel reaches its full production capacity.
The acquisition forms part of LNM’s strategy to revitalise the Zenica area and complements the recent joint venture agreement with RZR Ljubija for the mining and development of the Ljubija iron ore mines. It also further enhances LNM’s leading position in steel production in Central and Eastern Europe. LNM is already the largest producer with 14 million tonnes of capacity following acquisitions in Poland, Romania, Czech Republic and Macedonia.
Commenting, Lakshmi N. Mittal, Chairman, LNM Group, said:
“BH Steel has a number of exciting opportunities ahead of it. With the implementation of the capital expenditure programme, the plant has the potential to substantially increase its production to levels exceeding 2 million tonnes per year. We have also identified opportunities for BH Steel to increase its share of value added products over the longer term.
“LNM is the right investor to help BH Steel achieve these goals. We have a unique experience both in revitalising under-performing companies and operating in the region. Additionally we offer BH Steel all the advantages of being part of a global group – including access to our worldwide knowledge integration platform and our extensive sales and market network. Becoming part of the LNM Group will ensure that BH Steel has a long and profitable future ahead of it.”
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