ArcelorMittal sold assets in Kazakhstan for $286 million

Steelmaker ArcelorMittal has sold its assets in Kazakhstan to the state-owned private equity fund Qazaqstan Investment Corporation (QIC) for $286 million. This was reported by the Ministry of Industry and Construction of the country.

QIC acquired all the shares in ArcelorMittal Temirtau and ArcelorMittal Tubular Products Aktau. Under the terms of the agreement, the fund has taken over full management and responsibility for their operations – the companies will be rebranded and given a new name.

According to Kanat Sharlapayev, Minister of Industry and Construction, the negotiation process consisted of 11 rounds.

He emphasized that during the negotiations, ArcelorMittal requested $3.5 billion, which did not correspond to the calculations of international consultants.

«This became one of the main reasons for the long negotiation process. Our goal was to acquire the mill at a fair price without incurring expensive and protracted international legal proceedings. The urgency and acceleration of the negotiations were also dictated by the need to prevent the enterprise from stopping,» Sharlapayev noted.

He named several key points of the deal. The state reduced the value of the assets from $3.5 billion to $286 million, and no budget funds were spent on the deal. In addition, the new investor assumes obligations to the parent company ArcelorMittal to repay a short-term loan of $250 million and a long-term loan of $450 million within 4 years.

«I would like to emphasize that $286 million is the value of two fully operational enterprises. In addition, ArcelorMittal has no claims against the government of Kazakhstan. The agreement was reached within the legal framework, in accordance with international law,» the minister explained.

Kanat Sharlapayev said that the new owner of ArcelorMittal Temirtau will be the Allur Group, headed by Andrey Lavrentiev, Forbes Kazakhstan reports.

«There will be no presence of foreign investors. The enterprise will be owned and managed by a Kazakh investor. The total volume of investments over 3 years will amount to about $3.5 billion, and in the near future, investments will amount to more than $1 billion to improve the operational work of the enterprise,» the publication quotes the minister as saying.

Andrey Lavrentiev is No. 26 in the ranking of the most influential businessmen in Kazakhstan according to Forbes Kazakhstan, Chairman of the Board of Directors and a shareholder of the Allur Group of Companies, which includes Agromashholding and SaryarkaAvtoProm. The group is the official manufacturer, distributor and partner of Chevrolet, Kia, JAC and LADA car brands in the country. Lavrentiev owns 22.38% of the shares, while Yuriy Tskhay holds 52.22%.

As GMK Center reported earlier, following the accident at the Kostenko mine on October 28 this year, Kazakh President Kassym-Jomart Tokayev ordered the termination of investment cooperation with ArcelorMittal Temirtau. The company said that negotiations on nationalization began before the tragedy.