Voestalpine to build its largest steel factory on the Black Sea

Voestalpine to choose location for its largest steel factory.

Alfred Duesing, chief financial officer and member of the managing board Voestalpine, the Austrian steel giant, has signed a non-binding memorandum of understanding with Bulgaria’s Energy Minister Petar Dimitrov on September 8, which moved the company one step further to choosing a strategic location to build its largest ever factory on the Black Sea.
The memorandum aims to support the company’s potential investment in Bulgaria. At the end of last year, Voestalpine announced plans to build a massive steel-producing factory either in Bulgaria, Romania or Ukraine. The company is also considering Turkey as a possible location. According to the latest media reports, the Austrian steel giant is expected to invest no less than five billion euro in the facility. It would have an annual capacity of about 5.5 million tons of flat steel a year.

Voestalpine spokesperson Peter Schiefer said that production would make it the largest plant in Romania or Bulgaria. It would leave behind Bulgaria’s current leader Kremikovtzi, whose annual manufacturing capacity is about two million tons.

Voestalpine was expected to make its final decision on the location of the new plant by autumn 2008.

By signing the memorandum with Dimitrov, the document set out the obligations of both sides provided that the investor chooses Bulgaria for its project. The agreement also states that Voestalpine will use the latest environment-friendly technologies and employ no fewer than 4500 people.

Cabinet backing
The Bulgarian Cabinet has pledged to build 45km of new roads and renovate a further 50km of roads and 700km of railways. If Voestalpine chooses Bulgaria, the terminals at the nearest largest Danube city of Rousse and the Black Sea port of Bourgas have to be expanded as well. In September, the Cabinet approved a budget of 300 000 leva to hire international lawyers to act as consultants in negotiations with Voestalpine. The deadline for Voestalpine means that its decision has been shifted to the end of the year, Duesing said at the signing of the memorandum. Voestalpine considers those four countries for its future plant for several reasons. Many companies have been coming to Eastern Europe because of cheaper labour costs and the Austrian firm is no exception. Another reason is the strategic Black Sea location of all four countries, which is on the main route for production exports to and materials imports from Asia. If Voestalpine chooses Bulgaria, the factory will be built in the second-largest Black Sea city of Bourgas, which already has a long industrial history, as well as a developed mining industry. Carbon emissions are key
As previously reported by The Sofia Echo, Bulgaria has been told that the costs of meeting European Union environmental rules will be key in deciding the plant’s location. Dimitrov told reporters that Voestalpine officials had said that they were satisfied with the business environment in Bulgaria, but if they had to pay high costs for carbon dioxide emissions because of EU environmental protection measures, the company would build the plant outside the EU. Bulgarian news agency BTA, quoting the company’s management, said that Voestalpine accounted for 12 per cent of carbon dioxide emissions in Austria. Dimitrov said that the current EU policy towards a drastic reduction of greenhouse emissions ran counter to the accelerated development of the countries of Central and Eastern Europe. Unless the policy is changed, the development of this part of Europe will be delayed by many years, and maybe even the standards of CEE will be impossible to bring up to the levels in Western Europe, Dimitrov said. Bulgaria is the second country to sign similar non-binding memorandums with Voestalpine. The company already sealed an agreement with the government of Ukraine, and plans such deals with Romania and Turkey.