Recovery Of Steel Price To Help Azerbaijan Privatize In Steel Industry

28 July 2016

The Committee says that the fall in world prices for metals and excess of applications for the opening of new metallurgical plants set not the best background for the privatization of Da?k?s?n Filizsafla?d?rma OJSC (Dashkesan mining & processing plant), Fineko/ reports.

"We were aware from the beginning that we are going to have heavy search and negotiations with investors, given the investment needs of the enterprise at the level of $1 billion. However, rating agencies’ estimates are encouraging and allow hoping for ultimate success in the privatization of Da?k?s?n Filizsafla?d?rma," the source emphasized.

For example, Fitch assumes that a 15% overall decline in steel prices is possible in May 2016, and then recovery of prices will start gradually (by 5% in 2017 and 2018, and 2% in 2019).

"In the process of privatization of Da?k?s?n Filizsafla?d?rma we have yet to select a consultant on privatization, whose work will take about a year. As a result, within the period of the investment competition on Da?k?s?n Filizsafla?d?rma we can get into a new "window of opportunity" when the appetite and mood of investors will improve and market conditions will not be so minor," Committee’s source said.

In turn, a source at the Ministry of Economy pointed out that the negative situation on the world steel market has no direct inhibitory effect on the development of CJSC Azerbaijani Steel Production Complex (ASPC/APIK).

"Yes, in compliance with Azerbaijani President’s order Da?k?s?n Filizsafla?d?rma was withdrawn from the APIK structure and is open to privatization, but the work on creation of other businesses within the complex is continuing," the Ministry’s source said.

Work of APIK is supervised by Deputy Economic Development Minister Niyazi Safarov, who is responsible for industrial policy.

The main task of the investor at Da?k?s?n Filizsafla?d?rma will be an increase of its resource base from current estimated 270 million tons of iron ore due to additional geological exploration and increase of annual production of 60% iron concentrate from 250,000 up to 1.8 million tons.

At the same time no one deprived APIK of authority to create around the plant a metallurgical cluster, designed for production of the final metallurgical and metal products at the minimum level of 800,000 tons per year with payback period of no more than 4 years. The general designer of the latest production capacity has not been selected yet.


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