Two bidders shortlisted for Polish steel mills

As the treasury moves ahead with plans to privatize the sector, the Economy Ministry is preparing its own blueprint to restructure the cash-strapped industry.
By : Bogda Zukowska

   The Treasury Ministry this week is expected to select two investors for the privatization of steel mills Huta Katowice (HK), Sendzimira, Cedlera and Florian, said Leszek Filipowicz, a board member of consulting company BMF, which is advising the ministry on the sector's privatization.

   Filipowicz declined to say which companies the treasury is considering.

   The four mills represent two-thirds of the industry's output, which totalled some 9 million tonnes last year. In the first stage of the steel sector's privatization in January, six foreign steel manufacturers expressed interest. According to unofficial information, companies that submitted offers included Germany's ThyssenKrupp, France's Usinor, Finland's Rautarruki, US Steel from the United States, India's Ispat and Arbed of Luxembourg.

   As the treasury moves ahead with plans to privatize the sector, the Economy Ministry is preparing its own blueprint to restructure the cash-strapped industry. "It's a concerted action, not a contradictory undertaking," Filipowicz said. He added that BMF is also advising the Economy Ministry on its steel-sector related projects.

   The Economy Ministry's strategy for the steel industry calls for consolidating the four mills, creating a social shield for steel workers, with one-off payments or job retraining, and $1 billion to modernize the mills over a four-year period.

   "The new strategy is aimed at upgrading the Polish steel sector so that it can face the competition and survive on the market even without an outside investor," said Pawel Badzio, spokesman for the Economy Ministry. "The shortlist for privatization does not guarantee that the deal will be concluded," Badzio said, referring to the failed negotiations between HK and Corus, an Anglo-Dutch steel group.

   "The privatization strategy for the Polish steel sector envisages restructuring and consolidation of the sector," Filipowicz said. "It's an alternative scenario in case we do not succeed in selling the industry's assets to investors."

   The steel industry will be high on the government's agenda this week as a strategy for the sector is to be discussed by the Economy Ministry and trade unions from each of Poland's steel mills on March 26. On the following day, the treasury is expected to update a parliamentary commission handling economic issues about the current stage of the steel sector's privatization and the government's presentation of the new strategy for the sector to Parliament is scheduled for March 29.

   The steel sector has become a hot topic during the past two weeks, as trade union members from HK, Poland's largest steel manufacturer, went on hunger strike protesting against the possible bankruptcy of an HK mill and demanding a clear strategy for the troubled sector from the government.

   The steel industry is heavily in debt, which amounted to some zl. 10 billion ($2.3 billion) last year and as much as half of all losses fall on HK.