Russia's Severstal has expressed an interest in acquiring French loss-making steel plant Florange, owned by ArcelorMittal.
According to French media reports, representatives of Severstal have already conducted negotiations with ArcelorMittal about the possibility of acquiring the plant. Among the potential bidders are also two other companies, which names have not yet been disclosed.
Florange stopped its hot metal production facilities, which are estimated at 2.7Mt of pig iron per year in 2011, due to decline of demand in Europe. In early October, ArcelorMittal announced that it will not resume operation at the plant, planning to sell it, possibly to Russian investors.
In the meantime, Russian analysts doubt that Severstal will acquire the plant, as this will be contrary to the company’s strategy of development. In early September, Alexei Mordashov, head and owner of the company, said that Severstal has no plans to increase its steel output.
Moreover, the company has already had a bad experience of acquiring foreign assets in the USA and Europe. The acquisition and subsequent sale of the Italian company Lucchini and the US Warren, Wheeling and Sparrows Point factories has brought millions of losses to the company.
The situation is aggravated by the fact that due to the low demand for steel in Europe most of steelmakers prefer to sell their local assets. Also today, the financial position of Florange plant is so bad that its recovery will be problematic even for financially prosperous Severstal.
In addition, the acquisition of the European plant contradicts the main strategy of the company, which involves concentrating its activities in Russian and US markets.