New Stomana plant

PERNIK, Bulgaria (SeeNews) – Bulgarian steel mill Stomana Industry, controlled by Greek metallurgical group Viohalco, started the construction of a new long products unit worth more than 45 million euros yesterday, a senior Stomana official said. «The plant will start production in the first quarter of 2007,» Stomana Industry’s CEO Vladimir Nikolov told a news conference. The installed capacity of the new unit will be 800,000 tons of long products per year and its turnover is expected to reach 700 million levs (358.2 million euros), Nikolov added. The plant will make Stomana Industry the largest producer of reinforcement iron and special steel in Southeastern Europe, he said. The project will bring Viohalco’s total investments in the Bulgarian steel mill in the last three years to more than $100 million. The company bought the production line for the new unit manufactured by Italian metallurgical equipment company Danieli for around 5 million levs (2.56 million euros) in 2004. Danieli will upgrade the equipment and install it at the production site. Nikolov said the company would market more than 50 percent of the output of the new plant in Bulgaria in an attempt to counter illicit and low-quality imports from Ukraine and Turkey. Stomana Industry said last year it wanted to capture 60 percent of the Bulgarian long steel products market by the end of 2007, up from 40 percent in 2005, through the launch of the new production line. The company’s spokesman, Tomcho Tomov, then said the facility would produce 500,000 tons of long products annually. Stomana Industry now produces some 700,000 tons of crude steel – 100,000 tons of long products and 350,000 tons of flat products, 20,000 tons of grinding balls and 230,000 tons of semi-finished products a year. With the new plant the company will boost its annual steel output capacity to 1.6 million tons from 1.2 million tons. Stomana Industry sold over 700,000 tons of products last year, generating sales revenues of more than 250 million euros, Nikolov told SeeNews. The company expects its 2005 pretax profit to be equal to about 10 percent of its turnover, he added. The company has more conservative expectations for this year, as it faces strong competition from China and other Asian countries, Nikolov said. «This year the market is more unfavorable in price terms but we project a growth in sales volume,» he added. «The market, including the regional one, is growing as a whole. The huge infrastructure projects in the region help generate large sales volumes and we expect 2006 to be at least as good as the previous one,» Nikolov said. At present, the company generates 20 percent of its sales on the domestic market and plans to raise that share to more than 30 percent soon. Its major export markets are Germany, the UK, France, Spain and Italy. Stomana Industry contributes more than 25 percent of Bulgaria’s steel exports. It holds a 35 percent share of the domestic steel market. The steel mill, located in Pernik, south of the capital Sofia, is one of the three steel producers in Bulgaria. The other two are Promet Steel, located near the country’s Black Sea city of Burgas, and the largest steelworks Kremikovtsi in Sofia, in which Indian Ispat Industries holds a majority stake. Besides Stomana Industry, Viohalco controls Bulgarian aluminium profiles producer Steelmet and copper producer Sofia Med.