The Hungarian steel plant Dunaferr received a temporary administration

The Municipal Court of Budapest last week decided to liquidate the Hungarian steel mill ISD Dunaferr. The plant received a temporary administration. Eurometal reports about it with the reference to S&P Global.

At the same time, Tamas Pinter, the mayor of the city of Dunaujvaroš, where the plant is located, appealed to the government to take control of the enterprise, since the intervention of a private investor is unlikely.

“For many years we listened to the state saying that it would buy the steelworks, but the owner was not willing to sell it,” the mayor’s statement reads.

Tamas Pinter also added that the steel plant should now become the property of the state. He recalled that in 2020, Hungary’s bankruptcy law was amended, according to which in the case of strategically important companies, the state has a preferential right to purchase.

The local authorities put forward two requirements, the fulfillment of which must be guaranteed by the future owner of the enterprise: the preservation of the entire production spectrum, including the smelting of liquid steel, and the provision of full wages for all employees (about 4,000 people work at ISD Dunaferr).

According to reports, the Hungarian Dunaferr plant has been idle since the third quarter of 2022. In August and September of this year, the company stopped the operation of two blast furnaces with a total capacity of 1.2 million tons per year due to interruptions in the supply of coking coal.

According to S&P Global sources, for the plant’s proper operation, production volumes need to be increased to at least 80,000-100,000 tons of steel per month. At the same time, the cost of iron ore, coke and other materials, as well as electricity to support the production process will amount to several million, if not tens of millions of dollars per month. At the same time, according to several insiders, the combine has accumulated more than $500 million in debt, which consists, in particular, of unpaid quotas for carbon emissions, some outstanding loans to shareholders.

Traders and industry sources name several candidates for Hungarian Dunaferr: Duferco, Liberty Steel Group, Ukrainian group Metinvest and Chinese Hesteel, which owns the Zelezara Smederevo plant in Serbia.

As GMK Center reported earlier, Dunaferr has a complex ownership structure. The majority owner is Cypriot Steelhold, which, in turn, is 50% owned by the Industrial Union of Donbass.

Also, the Hungarian authorities have asked the UK’s steel company Liberty Steel to ship coking coal to the Hungarian steel mill ISD Dunaferr to avoid shutdown of the plant’s coke batteries. Dunaferr had planned to close its coke ovens on December 14, 2022, due to a coal shortage, but a government official said raw materials would be diverted from Liberty Steel’s Polish assets.