LN Mittal wins $4.8-billion televised auction for Ukrainian plant
25 October 2005Kiev: Lakshmi Mittal, Britain''s richest man, added to his global steel empire yesterday by paying $4.8bn for a Ukraine steel facility, after winning a live television auction for it.
Mittal, the world leader in steel, added about 10 per cent to the production capacity of Mittal Steel with the purchase of the mill.
Analysts were stunned at the price paid for the Kryvorizhstal plant, which was expected to fetch $3bn. Ukraine''s President, Viktor Yushchenko, hailed the deal as the start of a new economic era for his country. He told reporters: "The amount we will receive for this company will be 20 per cent higher than all the proceeds received in all the years of the Ukrainian privatisation. What happened today shows Ukraine is capable of staging honest privatisations, observing all vital legal procedures."
Mittal Steel came up trumps after a feverish auction was televised live to allay corruption fears, beating Europe''s No 1 player, Arcelor, in almost an hour of fast-moving bidding. Ukraine was selling the mill for the second time - it annulled a rigged auction that took place last year under the government of Leonid Kuchma. On that occasion it was sold for $800mn to a consortium led by Kuchma''s son-in-law. Mittal had then bid $1.5bn.
The sale of Kryvorizhstal, which produces 20 per cent of Ukraine''s metal output, is the biggest-ever foreign investment ever in Ukraine - equivalent to 20 per cent of this year''s anticipated budget revenues.
The Kryvorizhstal mill, a giant integrated plant, produces 7-million tons of steel a year but has the capacity to make 10 million. Mittal Steel said it would raise output levels and boost productivity, although the costs at the plant are well below the European average.