Voestalpine sells majority stake in US plant to ArcelorMittal

Dsseldorf (Reuters) – The Austrian steel group Voestalpine is selling the majority in its US plant, which only went into operation in 2016, to its competitor ArcelorMittal.

ArcelorMittal will take over 80 percent of the shares, the Austrians announced on Thursday. The selling price is around 610 million euros. The book profit is expected to be 280 million euros. The construction of the plant in Texas decided in 2012 cost 870 million euros. In the years 2019 and 2020, Voestalpine made unscheduled write-downs totaling EUR 372 million with reference to a difficult market environment.

CEO Herbert Eibensteiner admitted in a conference call that the plant had made operating losses on average over the years. The sale will result in a significant reduction in net financial debt. The risk from unneeded quantities is also reduced. The plant in Corpus Christi produces so-called “Hot Briquetted Iron” (HBI), a starting material for steel production that enables more climate-friendly production. The plant’s capacity is two million tons per year. Voestalpine agreed an annual purchase of 420,000 tons with ArcelorMittal. This is intended to promote more climate-friendly production at the domestic locations in Linz and Donawitz.

VOEST BOSS: “WE HAVE GOT SMARTER”

Eibensteiner reported that the board of directors had been examining all strategic options for the plant for a year. When asked if the construction of the plant was a mistake, he replied. “The conditions have changed. Decarbonization has come along. We have become smarter.” With the commissioning of one electric arc furnace each in Linz and Donawitz at the beginning of 2027, Voestalpine wants to reduce its carbon dioxide emissions by around 30 percent. Production should be completely climate-neutral by 2050.

The Thyssenkrupp competitor closed its 2021/22 fiscal year at the end of March. Irrespective of the current transaction, the group increased its outlook for the operating result (Ebitda) to just under EUR 2.3 billion after previously expecting up to EUR 2.2 billion. The stock temporarily gained 2 percent on Thursday.