Sidex wooers decide to shut down steel plant in Ireland

Irish Ispat Limited, subsidiary of Ispat International NV, announced its steel mill in Haulbowline, Cork, Ireland has been shut down. The company summoned a meeting of the creditors to appoint a liquidator.

Ispat Int. is held by the LNM Group, which is currently negotiating the purchase of the Sidex plant with the Romanian State.

The decision to shut down Irish Ispat was made because of the substantial losses it was incurring, which had pushed the company’s total debts to 36 million Ireland punts (IEP).

The total output of the Ireland-based plant (some 24,000 tonnes per month) accounted for two percent of the total steel output of the Ispat Group.

The shut down is not necessarily bad news for Ispat, as the group’s officials in Romania say closing a problem capacity will not hurt the group’s credibility.

Irish Ispat was formerly known as Irish Steel, the only steel maker in Ireland. The Indians bought the plant from the Irish Government back in 1996, by a transaction in which the European Union was also involved by paying 38 million IEP to cover restructuring costs.

Ever since purchasing the steel mill, Ispat has complied with every provision in the contract with the Irish State, a 24 million-punt investment inclusive.

It however failed to repeat in Ireland the success it had with other plants bought over the past few years, such as Unimetal, bought from France-based Usinor in 1999.

Over the past quarter, Ispat Unimetal’s sales went up seven percent, a rare performance compared with the other productive units, as most of them had been reporting declines in output.

The most recent attempt to save the plant was made two months ago, when the workers were requested a 60-percent production increase, which was not possible to attain without further investments.

The mill was also in trouble with the authorities, as the Environment Protection Agency in Ireland had recently required it to choose between a several million-punt ecological investment and stopping production.

Ispat management felt the latter was the best choice and therefore put it into effect as of June 15.