It is for the first time in the last five years that the company talks about an increase in production, after it almost halved its output due to the crisis in 2008-2009 and shut down some of its production lines. Before the crisis hit, ArcelorMittal Galati used to produce more than 3 million tons of steel each year. The production then went down to 1.6-1.7 million tons per year and stayed at this level in recent years.
“The current technical conditions are creating the frame for targeting to increase the production in 2015, from 1.6 million tons to more than 2 million tons. This forecast is possible only thanks to the measures taken by the authorities in the past months to support restoring the competitiveness of the Romanian business environment, especially aimed to re-establish rational prices for natural gas and electricity. Those decisions should not be temporarily and must be sustained on the long term at the same level,” said ArcelorMittal Galati representatives in a press statement.
The company faced a challenging environment in recent years, due to a significant increase in gas and electricity costs combined with lower demand on the international markets. ArcelorMittal Galati closed down most of its blast furnaces and even demolished some of them, saying that they were unsafe. The company also reduced its number of employees, mostly via voluntary leaves.
This led to speculations that the steel group controlled by Indian billionaire Lakshmi Mittal would shut down its operations in Galati. The company firmly denied all such rumors, saying that the plant in Galati still plays a key role in the group’s strategy for the European market.
“These major investments, amounting to EUR 10 million, show ArcelorMittal’s commitment for its unit in Galati”, said Bruno Ribo, the Chief Executive Officer of Business Division Galati – Skopje. He added that the effects of these investments were immediately visible in the company’s results. ”In August, the Blast Furnace no. 5 delivered its biggest production in the last 34 years,” Ribo said.
The investments mentioned were part of a larger EUR 90 million investment program started three years ago, which included the upgrade of Blast Furnace number 5 and of the Steel Melting Shop. Blast Furnace number 5, the only one currently functioning at the plant in Galati, is the largest in Europe and can produce more than 2 million tons of steel per year, according to the company. Two other furnaces, 3 and 4, are currently stopped and preserved. Three furnaces, 1, 2 and 6, have been demolished in recent years, due to safety issues.
The steel plant in Galati, formerly called Sidex, was privatized by the Romanian state in the year 2000. At that time, it was considered a black hole for Romania’s economy, as it produced losses of USD 1 million per day.
ArcelorMittal Galati was profitable for a few years, but after 2008 it returned to loss, after it reduced production due to lower demand. The company’s turnover went down from almost EUR 2 billion in 2008 to EUR 828 million in 2013. Its number of employees also halved, from 13,700 in 2008 to 7,100 in 2013. In five years (2009 to 2013) the company accumulated losses of EUR 780 million. (source: Romania-insider.com)