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EBRD and RZB finance a "mini mill" in Hungary
A recently privatised steel rolling mill, Ózdi Acélmûvek Kft (ÓAM), in the industrial north-east region of Hungary, received financing today from the European Bank for Reconstruction and Development (EBRD). Together with Raiffeisen Zentralbank Österreich AG (RZB - Austria), the EBRD has provided the steel company with a EUR 17.6 million loan to finance the construction of new electric arc steel-making capacity.
The arc furnace will form the core of an integrated steel "mini mill", which will produce steel from mainly domestic scrap supplies. The integrated mill will have an annual capacity of approximately 380,000 tonnes of rolled products for use primarily in the construction industry.
"With access to its own steel production, ÓAM is able to supply its growing regional markets on a low-cost and reliable basis," said Hubert Warsmann, EBRD Director for the Hungary and Slovenia Team. "The mini mill will be staffed to international standards and will draw on the longstanding experience of a German mini-mill operator. This is a good financing package for a cyclical sector."
The financing of EUR 10.2 million from the EBRD and EUR 7.4 million from RZB will enable ÓAM to restart its steel-making operation. The original steel-making facility was closed down in 1992 when the equipment being used was deemed obsolete. Since then, ÓAM has had to rely on imported billet to continue the production of rolled stock, but the imported materials are more expensive and supply less reliable.
ÓAM presently sells reinforcement bars, or rebars, used directly in the construction industry, and wire-rods, which are generally further processed into nails, nuts and bolts. The production of higher-value wire-meshes and stretched wires was launched in early 1999. Stefan Biricz, Managing Director of ÓAM, stressed the future opportunities: "Once the new electric arc furnace is operative, ÓAM will be able to produce a wider range of steel grades and expand into new markets, such as the engineering industry."
Since 1997, the Max Aicher Group (MAG) has owned ÓAM. MAG is a group of companies based in Bavaria, in Germany, predominately involved in construction, real estate, steel-making and environmental technologies. Together with the local management team, MAG has already achieved a major turn-around by improving the efficiency of the rolling mill, cost control and marketing. Norbert Knorren from MAG pointed to the successful know-how transfer from the other MAG companies to ÓAM. He said: "Further expertise in steel-making is to be provided by MAG companies, and a number of ÓAM employees are being trained in MAG plants in Germany."
RZB-Austria is the central institution of the Austrian Raiffeisen Banking Group and one of the leading banks in Central and Eastern Europe running bank subsidiaries in nine countries. Today, 3,500 employees of the RZB Group provide services through more than 120 banking outlets throughout the region. In addition the RZB Group offers several other finance related services.
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