Steel baron Lakshmi Mittal is upping his investment in Romania, despite a local threat to the future of his existing Sidex steel plant whose purchase was facilitated by the intervention of British Prime Minister Tony Blair.
Earlier this month, it was revealed that the grandchildren of the family who owned the land on which Sidex was built by Romania's communist government are planning to reclaim their inheritance under the terms of a property restitution programme.
Last week a spokesman for Mittal told rediff.com that he wasn't exactly overjoyed that the land Mittal's LNM Holdings had purchased in good faith was likely to come under challenge.Undeterred by what may lie ahead in the law courts, Mittal now plans to invest a further $155 million to buy two plants -- one steel and the other for making seamless tubes.
Mittal, Britain's richest non-resident Indian, will buy Siderurgica Hunedoara and Petrotub Roman.
Petrotub Roman is a producer of seamless pipes of different grades and varieties including casing, tubing, and line pipes and has an annual capacity of approximately 500,000 tonnes.
Siderurgica Hunedoara produces continuous cast billets, hot rolled profiles and bars, light, medium and heavy structurals and wire rods. The annual steel making and rolling capacity of Hunedoara is approximately of 750,000 tonnes.
The signing of this agreement comes only a day after LNM signed the privatisation agreement with the Polish Ministry of State Treasury for the acquisition of PHS, Poland's largest steel manufacturer.
Commenting on the latest business moves, Aditya Mittal, vice chairman, LNM Holdings, said, "With the contracts we have signed here on Wednesday and yesterday in Poland, we are extending our presence in Romania and Central and Eastern Europe, and consolidating our position as the strongest regional player in the industry."
"With Ispat Sidex and Ispat Tepro, we have demonstrated our abilities to turn around loss making companies and proved our commitment to be a strategic investor for Romania," he added.
"We are confident that we will be successful in turning around both Siderurgica Hunedoara and Petrotub Roman into solid, viable companies, using our extensive management expertise and the synergies the LNM Group can offer. We count, in this process, on the continuous support of the government and the employees of the two companies," he said.
The LNM Group is the world's second largest steel producer with integrated steelmaking facilities in 12 countries with estimated annual shipments forecast to exceed 35 million tonnes and revenues of over $12 billion in 2003.
The group, including LNM Holdings NV and Ispat International NV, has approximately 120,000 employees worldwide from over 45 nationalities. Ispat International is listed on the New York and Amsterdam Stock Exchanges.
LNM Holdings has steelmaking interests in Kazakhstan, Romania, Algeria, Czech Republic and South Africa. There are substantial synergies from its relationship with Ispat International, which has highly efficient, modern steelmaking operations in the United States, Canada, Mexico, Trinidad and Tobago, Germany and France.
Through its ownership of Ispat Sidex in Romania and Ispat Nova Hut in the Czech Republic, LNM Holdings is already the largest steel producer in Central and Eastern Europe with combined shipments of over 8 million tones of steel products.
