Swiss-Slovak partnership might come to help the ailing Dunaújváros steel plant

The consortium, which is well capitalised and has considerable professional experience, plans to supply iron ore and steel billets to the former ISD Dunaferr interests owned by Liberty. According to Világgazdaság,

Duferco and Minerfin do not intend to acquire an ownership stake in the former Dunaferr, but would only operate the assets that Liberty has acquired.

The consortium has already contacted the companies with which it would be necessary to cooperate in connection with the Dunaújváros activity. Minister of National Economy Márton Nagy has also been approached on the matter, and it is possible that in the light of new developments - in particular the liquidation of rolling mill owner Dunarolling - they may be approached again.

This development could be a lifeline for the iron and steel plant in Dunaújváros and the employees currently on "downtime". At present, there is no other way out of the difficult situation. A statement by the Ministry of National Economy (NGM) on 1 October also painted a rather gloomy picture of the situation after ISD Power initiated liquidation proceedings against Dunarolling. The NGM recalled that by the end of 2022, ISD Dunaferr had become insolvent, the factory's operations were no longer viable and the jobs of thousands of workers were at risk. The emergence of Liberty Steel brought a turnaround, when in the last days of the year it bought the two companies that took over the assets, operations and employees of the ironworks.

Liberty came with ambitious plans, but according to the NGM, little progress has been made. Runaway energy prices and the collapse of world steel prices have made the situation even more difficult. The state has so far contributed some HUF 70 billion to the rescue of the ironworks. The ministry says that green steel production could be the solution, but Liberty's initiatives in this area are not showing results either. Moreover, the production switchover would cost approximately HUF 200 billion.

While improvements and investments have been made during 2023, the financial situation remained difficult. Dunarolling has accumulated losses of HUF 17 billion on a turnover of HUF 27 billion. Experts have warned against the electric arc furnace investment promised by Liberty. They stressed that for Dunaújváros, the continuation of the current integrated steel production could be a viable solution.

Problems kept mounting in 2024, with news of the recent owner Liberty Steel shutting down cokers, restructuring production and sending several workers on indefinite "downtime". The company has also been late with paying wages and the promised bonuses to workers, which has led to protest and a strike in the summer.

While the outcome of the Swiss-Slovak consortium's attempt and Liberty's plans is still uncertain, some things are already clear. Steel prices are low, Chinese steel production is at record highs, while Hungarian steel production has stalled and exports have been lost. Domestic steel demand is currently being met by foreign sellers, including Chinese producers with strong positions.

Duferco and Minerfin have considerable experience in the steel industry. Duferco's steel business comprises 11 companies, while Minerfin is active in the trading of iron alloys and refractories, as well as iron ore mining.

Cover photo (for illustration purposes only): Getty Images