The former Sidex, a great accomplishment of the communist era industry, and now owned by Indian-born billionaire Lakshmi Mittal, posted RON3.9 billion losses in 2009-2014, according to ZF calculations.
“Out of six furnaces they had 25 years ago only one remains. Going there is depressing for me. There are only gardens there now,” says Professor Victoras Geanta of the Polytechnic University of Bucharest, commenting on the current status of ArcelorMittal Galati. The plant has only 6,700 employees now compared with 27,000 upon privatization and almost 16,000 in 2006.
ArcelorMittal Galati officials did not provide any comment on last year’s financial results.
The company posted its worst loss in 2013, RON741.6 million, while 2012 was close to the good years of the plant 2005-2007, with revenue reaching RON5.41 billion.
The massive losses and the renewable energy costs are two factors often mentioned by the representatives of the steel plant, including Mittal himself, who suggested in a meeting with Prime Minister Victor Ponta in 2013 the possibility of leaving Europe because of the too high energy prices.
ArcelorMittal Galati, the largest employer and also the largest company by revenue in the Galati county is trying to find a future on a market where demand has not recovered yet and China is calling the shots.
Steel price has fluctuated heavily in the last six or seven years, going from more than $1,200/ton in 2008 to $400/ton in 2009, according London Metal Exchange data. The price started to rise in 2010, reaching more than $600/ton only to steadily go down afterwards to the all-time low of $125/ton in 2013. From then on it started rising again, to around $500/ton last year. The price remained at around $500/ton at the beginning of 2015 and then dropped to around $300 where it has been staying for two or three months.
Besides the cheap imports from Turkey and Ukraine, another factor in the situation the plant is in is the failure to adjust to the new market after the crisis. Automobile Dacia, for instance, imported EUR100 million worth of sheet metal in 2013 because the former Sidex was unable to provide the raw material for the bodies of the cars assembled only 300 kilometers away from Galati. The decline in demand for steel and the price fluctuation made an impact on the former industrial giant that Lakshmi Mittal bought for $70 million in 2001, when its production capacity stood at 5 million tons. (EUR1=RON4.4594)
(English version by Loredana Fratila-Cristescu)