Zlatoust Metallurgical Works (ZMZ), a subsidiary of the Russian steel producer ESTAR Holding, has announced its decision to temporarily stop about 90 percent of its operations until June 2009.
The process of idling the plant started on April 22 and is to continue until the middle of May.
"Currently ESTAR Holding...needs to attract an investor which will decide on the restructuring issues and will support the further development of all the group," ZMZ CEO Sergey Homyanin has stated. "At this moment, the market allows ZMZ to work with sales volumes of Ruble 300-500 million per month and with a loss of about Ruble 20 million per month, excluding interest payments. At the beginning of the year the plant's monthly losses amounted to around Ruble 100 million. The idled plant will cost the same amount in losses. In order to restart the production, the account payable and the account receivable issues must be resolved," Mr. Homyanin added.
ZMZ's account payable amounts to about Ruble 800 million, including Ruble 300 million debts for energy and Ruble 500 million for raw material supply. Meanwhile, at the beginning of 2009, the plant's account receivable amounted to about Ruble 1 billion.
According to Mr. Homyanin, the bankruptcy or the resale of the plant is not planned.
Currently, five electric arc furnaces and four rolling mills are operating at ZMZ. The plant's open hearth workshop was idled on December 27, 2008. So far in April, ZMZ has produced 9,300 mt of crude steel and 7,900 mt of rolled steel products, while deliveries have amounted to 7,800 mt of steel products. The plant employs about 6,000 people.