metals in southeast europe

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EU member state Bulgaria, traditionally a strong producer and exporter of metals, had ninecompanies represented in the ranking of the top 20 metals enterprises. This ranking was ledby Romanian steel plant ArcelorMittal Galati with annual revenue of 2.23 billion euro in 2008, up 5.5% on the year. The ArcelorMittal steel group has four plants in Romania,located in Roman, Iasi, Hunedoara and Galati. The plant in Hunedoara ranked 17th, whileanother company belonging to the same group occupied the eighth place - ArcelorMittald.o.o. Zenica in Bosnia and Herzegovina.

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Page 1: Metals in Southeast Europe

Copyright All rights reserved. Downloads and print extracts of SeeNews – Research & Profiles content are allowed for personal and non-commercial use only. Re-publication or re-distribution of content, including by framing, is strictly prohibited without the prior written consent of SeeNews – Research & Profiles. SeeNews - Research & Profiles and its logo are registered trademarks of AII Data Processing Ltd. SeeNews 2009

SEE INDUSTRY AT A GLANCE

Metals in Southeast Europe

August 2009

Page 2: Metals in Southeast Europe

Copyright All rights reserved. Downloads and print extracts of SeeNews – Research & Profiles content are allowed for personal and non-commercial use only. Re-publication or re-distribution of content, including by framing, is strictly prohibited without the prior written consent of SeeNews – Research & Profiles. SeeNews - Research & Profiles and its logo are registered trademarks of AII Data Processing Ltd. SeeNews 2009

EU member state Bulgaria, traditionally a strong producer and exporter of metals, had nine companies represented in the ranking of the top 20 metals enterprises. This ranking was led by Romanian steel plant ArcelorMittal Galati with annual revenue of 2.23 billion euro in 2008, up 5.5% on the year. The ArcelorMittal steel group has four plants in Romania, located in Roman, Iasi, Hunedoara and Galati. The plant in Hunedoara ranked 17th, while another company belonging to the same group occupied the eighth place - ArcelorMittal d.o.o. Zenica in Bosnia and Herzegovina.

Bulgarian copper smelter Aurubis was the second largest company with revenue of 1.3 billion euro in 2008, but it ended the year with a net loss of 86.4 million euro.

Despite the global economic downturn and shrinking industrial production, most of the metals companies in the sub-ranking either raised their revenues compared to 2007 or in the worst case registered a minor decline. Four of them ended 2008 with a loss, the same number as in 2007.

This industry overview is an integral part of SEE TOP 100, Edition 2009 – a comprehensive, in-depth guide to the transition economies of Southeast Europe, published be SeeNews. SEE TOP 100 is a unique ranking of the biggest companies in the region of Southeast Europe. This annual publication comprises:

• SEE TOP 100 • SEE TOP 50 Banks • SEE Top 50 Per Capita • SEE Industrial • SEE IPOs • SEE Corporate Management • SEE TOP 100 CEOs List • SEE Country Profiles • SEE Best Employers • Analyses & Interviews

If you are interested in obtaining a hard copy of the SEE TOP 100, Edition 2009, please e- mail us at [email protected] or call at +359 2 8012 610. The SEE TOP 100 ranking is also available on www.top100.seenews.com.

Page 3: Metals in Southeast Europe

Copyright All rights reserved. Downloads and print extracts of SeeNews – Research & Profiles content are allowed for personal and non-commercial use only. Re-publication or re-distribution of content, including by framing, is strictly prohibited without the prior written consent of SeeNews – Research & Profiles. SeeNews - Research & Profiles and its logo are registered trademarks of AII Data Processing Ltd. SeeNews 2009

Company name Country Total revenue

2008 Total revenue

2007

Net Profit/Loss

2008

Net Profit/Loss

2007

1 Arcelormittal Galati SA Romania 2,234.03 2,117.22 151.78 89.96

2 Aurubis Bulgaria AD Bulgaria 1,308.50 1,128.27 -86.44 26.76

3 U.S. Steel Serbia DOO* Serbia 967.06 907.05 4.91 28.16

4 Alro SA Romania 614.92 626.85 62.04 120.84

5 Stomana Industry AD Bulgaria 577.21 448.18 48.94 46.88 6 IMPOL d.o.o. Slovenia 522.79 495.20 5.50 4.49

7 Acroni d.o.o. Slovenia 445.24 469.91 20.81 32.43

8 Arcelormittal d.o.o. Zenica** B and H 366.58 236.20 N/A 32.31 9 Sofia Med AD Bulgaria 316.48 353.97 -28.76 -1.29

10 TALUM d.d. Slovenia 310.00 361.95 0.36 9.16

11 Mechel Targoviste SA Romania 304.13 230.56 26.68 7.23

12 Kremikovtzi AD Bulgaria 285.07 683.54 -498.77 -23.34

13 KCM AD Bulgaria 238.14 330.11 N/A 21.84

14 Mechel Campia Turzii SA Romania 198.42 140.46 12.21 -7.75 15 Assarel Medet AD Bulgaria 188.34 265.76 109.27 106.66

16 Tvornica Lakih Metala - TLM d.d. Croatia 179.70 132.77 -5.14 70.46

17 Arcelormittal Hunedoara SA Romania 164.49 212.19 0.55 -14.36 18 Hus OOD Bulgaria 151.49 109.96 10.14 8.32

19 Alcomet AD Bulgaria 113.59 128.79 0.57 1.92

20 Ekometal Engineering EOOD Bulgaria 105.20 34.14 28.30 17.88

The metals sector in Southeastern Europe (SEE) went through the turbulence of restructuring in the post-Communist era in the 1990s and some of the largest metal ore mines and smelters found prosperity under foreign investors. The sector flourished until 2007, before the global economic downturn began.

Methodology SEE Industry at a Glance represents a series of sub-rankings of the 20 biggest companies by total revenue within the top five industries in SEE TOP 100: Petroleum/Natural Gas, Electricity, Wholesale/Retail, Telecommunications and Metals. In order to make the ranking more comprehensive, we have looked beyond the 100 companies in our flagship ranking and expanded the scope to the entire pool of over 1,000 enterprises.

in millions of euro (*) denotes net sales revenue (**) denotes net sales revenue for 2007

Page 4: Metals in Southeast Europe

Copyright All rights reserved. Downloads and print extracts of SeeNews – Research & Profiles content are allowed for personal and non-commercial use only. Re-publication or re-distribution of content, including by framing, is strictly prohibited without the prior written consent of SeeNews – Research & Profiles. SeeNews - Research & Profiles and its logo are registered trademarks of AII Data Processing Ltd. SeeNews 2009

Steel and Base Metals

SEE countries produce mainly steel, zinc, lead, copper and aluminium. The region’s biggest steelworks, smelters and refine ries are located in Bulgaria, Romania, Serbia and Slovenia. Bosnia’s metal industry has been picking up pace over the last five years.

Production of Metals by Country (in metric tonnes)

Country Year Albania 2007 2006 Chromium 323570 210120 Copper - 10000 Steel (crude) 100,000* 100000 Steel (rolled) 115,000* 114000 Bosnia and Herzegovina 2007 2006 Aluminium (Metal, ingot, primary and secondary) 147193 136190 Steel (crude) 513867 469122 Pig Iron 60000 60000 Lead (metal, smelter, primary, secondary) 1 33 Bulgaria 2007 2006 Aluminium (Metal, ingot, primary and secondary) 12,800* 12825 Copper (ore gross weight) 29674000 29572000 Copper (smelter) 229100 238500 Copper (refined) 69900 65500 Steel (crude) 2,050* 2124 Pig Iron 1069 1147 Lead (metal, refined, primary, secondary) 86956 76028 Zinc (metal, refined, primary, secondary) 99992 95341 Croatia 2007 2006 Aluminium (Metal, ingot, secondary) 2,500* 2457 Steel (crude) 75,000* 80516 Macedonia 2006 Aluminium (Metal, ingot, primary and secondary) 4000 Copper (ore gross weight) 4132000 Steel (crude) 326484 Nickel 10900

Page 5: Metals in Southeast Europe

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Country Year

Montenegro 2007 2006 Aluminium (Metal, ingot, primary) 135151 121762 Steel (crude) 173849 163165 Moldova 2005 Steel (crude) 1000000 Romania 2006 Aluminium (Metal, ingot, primary and secondary) 265000 Copper (ore gross weight) 12200 Copper (smelter) 10 Copper (refined) 23581 Steel (crude) 6318000 Pig Iron 3966 Lead (metal, refined, primary, secondary) 33100 Zinc (metal, refined, primary, secondary) 43705 Serbia 2007 2006 Copper (ore gross weight) 6867000 5775000 Steel (crude) 1478000 1837000 Pig Iron 1377478 1529177 Lead (metal, refined, primary, secondary) 700 700 Zinc (refined) - 15000 Slovenia 2007 2006 Aluminium (Metal, ingot, primary) 111016 118100 Steel (crude) 638000 627000 Zinc (refined, secondary) 15000 15000

*Estimated figures Source: United States Geological Survey Mineral Resources Program

Page 6: Metals in Southeast Europe

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Map: Concentration of Metals by Country

Country Type of Metal

Albania Cromium, Nickel Bosnia and Herzegovina Aluminium, Iron/Steel Bulgaria Lead/ Zinc, Copper Croatia Aluminium, Steel Macedonia Copper, Lead/Zinc, Nickel Montenegro Aluminium Moldova Steel, Copper Serbia Aluminium, Copper, Lead/Zinc, Iron/Steel Romania Aluminium, Copper, Lead/Zinc, Iron/Steel Slovenia Aluminium,Lead/Zinc, Steel

Source: Company websites

Crisis Deters Investment

Falling prices of metals on international markets, suspended or delayed investment projects, and staff cuts dominated the sector at the end of 2008. Montenegrin aluminium giant KAP and Bulgarian steel mill Kremikovtzi amassed fresh debt and were headed for a closure. Serbia failed to find a buyer for its troubled copper mining and smelting company RTB Bor and in November it called on all creditors of the company to claim debt owed to them, totalling some USD 400 mln. Although most metal companies in SEE either halted or deeply cut production and laid off employees in the closing quarter of 2008, some allocated money to investment last year. They invested mainly in upgrades of their outdated equipment and in environmental projects.

Page 7: Metals in Southeast Europe

Copyright All rights reserved. Downloads and print extracts of SeeNews – Research & Profiles content are allowed for personal and non-commercial use only. Re-publication or re-distribution of content, including by framing, is strictly prohibited without the prior written consent of SeeNews – Research & Profiles. SeeNews - Research & Profiles and its logo are registered trademarks of AII Data Processing Ltd. SeeNews 2009

Announced Investments in the SEE Metals Sector in 2008

Source: SeeNews

In Private Ownership

Once pillars of the centrally planned Communist economies of SEE, nearly all leading metal companies in the region are in private ownership today. Governments throughout SEE have sought strategic partners for the privatisation of smelting and mining companies. The model used in the privatisation process was either a sale to a powerful foreign investor or an acquisition through management-employee buyout schemes, as was the case of Bulgaria’s KCM 2000 and Slovenia’s Impol 2000 d.d. Foreign investors had a significant role in the recovery of former state-owned enterprises in the SEE metals sector. Some of the world’s largest metal companies such as Duferco, Vimetco, U.S. Steel Corporation, ArcelorMittal and Norddeutsche Affinerie AG, have already entered the SEE market, replacing its outdated technologies with up-to-date know-how and equipment.

Company Project EUR mln

Stomana Industry AD (Bulgaria) Production line 79.40 U.S. Steel Serbia DOO (Serbia) Galvanization line 69.00 ArcelorMittal Zenica d.o.o. (Bosnia and Herzegovina) Blast furnace modernisation 63.00 Aluminij d.d. Mostar (Bosnia and Herzegovina) Anode factory 41.00 Alro SA Capacity upgrades 41.00 Kurum International Sh.P.k. (Albania) Installation of shredder 20.00 Kremikovtzi AD (Bulgaria) Rehabilitation of convector and electric furnace 8.00 Gorubso-Madan AD (Bulgaria) Capacity modernisations over 5 years 0.04

Page 8: Metals in Southeast Europe

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Majority Owners of SEE Metal Companies

Company Country Majority Owner Stake Olovno-Tzinkov Kompleks (OTZK) AD Bulgaria Intertrust Holding BG AD 89.86% Makstil AD Macedonia Duferco Skop Investment Ltd. 62.00% Acroni d.o.o. Slovenia SIJ – Slovenska industrija jekla d.d. 100.00% MTL - Tvornica Lakih Metala d.d. Croatia Concortium, led by Dalekovod d.d. 80.00% Alro SA Romania Vimetco N.V. 84.19% U.S. Steel Serbia DOO Serbia U.S. Steel Corporation 100.00% Impol d.o.o. Slovenia Impol 2000 d.d. 97.50% Talum d.d. Slovenia Elektro Slovenija d.o.o. 80.00% Sofia Med AD Bulgaria Halcor SA Metal Works 99.90% Rudarsko-topionicarski basen Bor (RTB) d.o.o. Serbia Serbian government 100.00%

Stomana Industry AD Bulgaria Sidenor Steel Products Manufacturing

Company SA 100.00% Jelsingrad Livar Livnica Celika AD B and H Livar d.d. 65.00%

Aluminij d.d. Mostar B and H Government of Bosnia and Herzegovina 100.00% Kremikovtzi AD Bulgaria Global Steel Holdings Ltd. 71.00% Kombinat za Cvetni Metali (KCM) AD Bulgaria KCM 200 AD 94.50% ArcelorMittal Zenica d.o.o. B and H ArcelorMittal 92.00%

Kurum International Sh.P.k. Albania Kurum Demir Sanayi ve Ticaret

Metalenerji AS 100.00% Aurubis Bulgaria AD (formerly known as Cumerio Med AD) Bulgaria

Aurubis AG (formerlyNorddeutsche Affinerie AG) 99.77%

Albanian Chrome Company (ACR) Sh.P.k Albania

A joint venture of Austrian-based trading company DCM DECOmetal GmbH and

Russian firm OOO Terwingo 100.00% Kombinat Aluminijuma Podgorica (KAP) AD Montenegro

Central European Aluminium Company (CEAC) Ltd. 58.73%

Selling in Europe

All major SEE smelters and foundries export their output to European destinations. Germany, Austria, Italy, France and the Balkans are key markets for SEE metal companies, which generate a large part of their sales revenue.

Page 9: Metals in Southeast Europe

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Long-term trade contracts and proximity to the Western European market are crucial for the choice of export destinations by metal companies in SEE.

Global Metal Companies in SEE

The privatisations and the subsequent restructuring in the SEE metals sector opened the way for an inflow of foreign investment much needed for the modernisation of outdated equipment and production technologies in SEE factories.

Big regional companies like Sidenor Steel Products Manufacturing Company SA (Greece), Halcor SA Metal Works (Greece), SIJ – Slovenska industrija jekla d.d. (Slovenia) and Kurum Demir Sanayi ve Ticaret Metalenerji AS (Turkey) also bought metal production plants in SEE to strengthen their positions.

Global and Big Regional Metal Companies Operating in SEE

Company Operates in

Duferco SA (Belgium) Macedonia Vimetco NV (the Netherlands) Romania ArcelorMittal SA (Luxembourg) Bosnia and Herzegovina, Bulgaria, Romania Aurubis AG (Germany) Bulgaria U.S. Steel Corporation (the USA) Serbia Sidenor Steel Products Manufacturing Company SA (Greece) Bulgaria, Macedonia Halcor SA Metal Works (Greece) Bulgaria, Romania, Serbia Kurum Demir Sanayi ve Ticaret Metalenerji AS (Turkey) Albania SIJ – Slovenska industrija jekla d.d. (Slovenia) Slovenia