Liberty Steel Ostrava, a steel manufacturing plant in the Czech Republic, recently entered an insolvency process. This comes after its parent company, GFG Alliance, put the plant up for sale and filed for judicial reorganization in mid-June.
A source within GFG Alliance told MetalMiner that a regional court in Ostrava, which lies in the eastern Czech Republic’s Moravian-Silesian Region, officially declared the plant insolvent on June 21.
“Since December, Liberty has explored every possible option to support and restructure Liberty Ostrava so it can be a sustainable business in the face of Europe’s highly challenging market conditions,” the company said in a June 12 statement.
“However, given the ongoing material risks and uncertainties facing Ostrava, Liberty has decided the right course of action is to initiate a sale of Ostrava’s operations and withdraw the preventative restructuring plan in order to enter into a judicial reorganization under the Insolvency Act,” the organization added. Receive MetalMiner’s weekly newsletter and receive insights to help you navigate price volatility and economic changes which come with steel manufacturing plants closing or opening.
Reorganization Fends Off Creditors Amid €1 Million Daily Debt”
GFG Alliance took care to note that the reorganization also protects the company from its creditors and allows Liberty the time to find a way to keep the company sustainable. Reports indicate that the steel manufacturing facility’s debts currently equate to about about €1 million ($1.07 million) per day.
Meanwhile, the company also claimed that uncertainty over carbon emissions allocations from the Czech government also created a financial hole of €43 million ($46.2 million) in the preventative restructuring plan. Liberty warned that this could also lead to Ostrava’s insolvency once it surrenders allocations. For now, Liberty will continue to run the Ostrava assets that allow them to cover their own costs.
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Ostrava’s Future and Steel Manufacturing Capabilities
Liberty acquired Ostrava from ArcelorMittal in 2019. This came after the European Commission required that group to divest several of its European plants due to the acquisition of Italian steelmaking group Ilva in 2018. Ostrava’s hot end has remained off stream since late 2023, and any and all reports of plans to resume production have failed to come to fruition.
Meanwhile, local press sources stated that potential suitors for Ostrava have so far included compatriot longs and flats producer Třinecké železárny, which lies about 55 kilometers southeast. However, Třinecké železárny’s shareholders continue to show some hesitation in acquiring Ostrava, as they would need a guarantee of state assistance in decarbonizing the plant. Two other Czech groups and India’s Jindal Steel have also expressed interest in the site.
3 Million Metric Ton Steel Manufacturing Powerhouse Up for Sale
Information on the company’s site indicates that the Ostrava steel manufacturing plant boasts a total of four blast furnaces. It can produce up to 3 million metric tons per year of crude steel from 4 tandem furnaces, from which the plant casts billets and slabs. The facility also rolls heavy and medium sections, rebar wire rod, and hot rolled strip in 130-170mm widths. The flat rolled products also serve as feedstock for producing spiral welded pipes at Ostrava’s pipe plant, which can manufacture seamless pipes as well.
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