Metals in Southeast Europe

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 Arcelor Mittal 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 - ArcelorMittald.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.

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

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 oremines and smelters found prosperity under foreign investors. The sector flourished until 2007, before the global economic downturn began.

Steel and Base Metals

SEE countries produce mainly steel, zinc, lead, copper and aluminium. The region’s biggeststeel works, 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)

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

Map: Concentration of Metals by Country

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.

Announced Investments in the SEE Metals Sector in 2008

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, Arcelor Mittal and Norddeutsche Affinerie AG, have already entered the SEE market, replacing its outdated technologies with up-to-date know-how and equipment.

Majority Owners of SEE Metal Companies

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.

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 outdate dequipment 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 KurumDemir Sanayi ve Ticaret Metalenerji AS (Turkey) also bought metal production plants in SEEto strengthen their positions.

Global and Big Regional Metal Companies Operating in SEE

Note: Merar hosts database of investment opportunities Bulgaria from all sectors of the economy including metals.

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