Economy 7 February 2014, 9:27am

Hungary Dunaferr not for sale, Russian owner reiterates

Portfolio

The Russian owner of Hungary-based steel works ISD Dunaferr still does not wish to sell this unit, it has turned out three months after they said they want to keep the company. The mayor of Dunaújváros, the hometown of ISD Dunaferr, claimed earlier that Prime Minister Viktor Orbán made a buyout offer for the steel works to Russian President Vladimir Putin when he visited him in Moscow in January.

Lajos Dorkota, President of the Hungarian Energy and Public Utility Regulatory Authority (MEKH) said on Friday the Russians stressed at talks between Economy Minister and Dunaferr majority owner Vnesheconombank (VEB) that the steel works is not for sale. Promises have been made, though.

Local daily Magyar Nemzet reported today that when Varga asked the representatives of Russia’s fourth-largest bank VEB on Thursday whether they wish to sell Dunaferr, he received a firm ’no’ for answer. Therefore no specific bid was made, the paper added.

Dorkota said VEB made it clear they intend to create the most competitive steel works of Central and Eastern Europe in Hungary and to this end they have signed a contract for the refurbishment of Blast Furnace No.1. He added the company promised the works to be completed by 20 August.

With the furnace reconstructed Dunaferr will be able to keep 3,500 jobs, Dorkota said, adding the layoff of 1,500 workers is no longer on the agenda. According to the latest agreement, no more employees other than the 400 already sacked will be made redundant, he added.

Dorkota noted the Russians think system, not money, and they were highly determined at the negotiations to enhance the quality of the steel works via new upgrades.

The promise not to go ahead with the planned layoffs is most interesting because there had been reports that on top of the 1,500 people to be let go another 600 to 800 jobs will be axed.