ArcelorMittal, 678m-euro profit in Galati

Indian-held ArcelorMittal, Romania’s biggest exporter, has generated cumulated profits worth $884m (678m euros) in Galati since it took over the Sidex steel mill, but has closed down half of the production capacities and let go around 3,000 employees through voluntary redundancy programmes over the last year.

ArcelorMittal’s half-year global results show turnover halved and the company slipped into the red, with a negative result of 1.4bn euros. In this context, the mill’s long-term existence is uncertain.

“ArcelorMittal Galati remains confident in the future of the company’s operations. The company will continue to take all the necessary steps to ensure that its development plans remain unchanged despite the international crisis,” ArcelorMittal Galati officials specified.

Ties between ArcelorMittal and the representatives of Romanian harbour authorities have recently taken a very tense turn, after the group decided to bring raw materials from the Bulgarian harbour, and not the one of Constanta, whose transportation flow depended on the raw material of the steel mill.

Production cuts were implemented as early as the end of last year, when the Indian firm closed down one of the three operating furnaces of the complex.

Galati trade union members say that, for the time being, they are no longer worried that the mill may close down, as production has been resumed. “(…) Production has risen in recent months. In July we produced around 100,000 tonnes and a level of 200,000 tonnes is expected to be reached by yearend. It’s not the peak reached last year, when we used to churn out 330-350,000 tonnes, but it’s a good sign,” stated Ioan Macovei, head of the trade union at the coke plant that was closed down.

The decision to halt production came in the context where the iron and steel industry has been badly hurt by the crisis amid plummeting demand in the main industries it works for – automotive and ship construction.

The decisions to close down some sections of ArcelorMittal also came in the wake of shrinking orders during this period, which strongly eroded the company’s sales. ArcelorMittal Romanian sales went down by 68.3% in H1, to $285m, from $813m in the same period of 2008, according to data provided by the group.