Russia's largest steelmaker Magnitogorsk Iron & Steel Works (MMK) and Atakas Group, one of the leading Turkish mining companies, today held a signing ceremony in the southern Turkish port city of Iskenderun for the joint construction of an iron and steel mill in the region.
By the time the first phase of construction is completed in late 2009, the mill will have a production capacity of 1.6 million mts, which will reach a total of 2.6 million mts when the second phase is completed in late 2011. Total investment for the project, negotiations for which commenced eight to nine months ago, is predicted to surpass $1.1 billion. The cost of the project will be financed through capital of $100 million each from MMK and Atakas, with equipment suppliers providing $400 million and banks supplying the remaining $500 million. MMK and Atakas will each hold a 50 percent stake in the new mill.
An electric arc furnace, a slab caster, a cold rolling mill, a hot rolling mill, a galvanizing line and a color-coating line are planned to be built at the mill depending on details such as building licenses and structuring. MMK and Atakas, which are currently carrying out work to determine the layout of the mill facilities, are in talks with the construction companies on the issue and are soon expected to finalize all related details. The products to be produced at the new mill will primarily meet the needs of the Turkish local market; however, in line with market conditions and demand, the mill will export some products mainly to the Middle East and Gulf Region.
Atakas Holding chairman Mr Recep Atakas stated at the ceremony held today that Turkey imported eight million mts of flats in 2006 and that if there was no new investment, Turkey would have to import 20 million mts of flats in 2015. Therefore, it held great importance to invest in Turkey in terms of meeting the needs of flats in this market, he added
MMK, which has been supplying its products to Turkey for years, exports 20 percent of its production (approx. one million mts) to Turkey. The company plans to increase its liquid steel production to 16 million mts and its finished steel production to 15 million mts in a five-year period. The company also plans to supply 60 percent of its production to the local market and 40 percent to export markets during the same period.
Regarding the issue of whether they would surpass Erdemir, MMK chairman Mr Viktor Filippovich Rashnikov declared that they would first focus on achieving their production targets, and that then they would set new targets. In addition, Mr Rashnikov stated that they didn't see China as a threat in Turkey since they would produce high quality products using state-of-the-art technology.
Largest Russian iron and steel producer MMK has a total annual finished steel production of 12.5 million tons, including 10.5 million tons of flats and two million tons of longs. The company's revenue is $6.4 billion with a net profit of $1.4 billion recorded in 2006. MMK shares are listed on London Metal Exchange.
Atakas Group of Companies' main spheres of activity involve imported coals. Atakas Group possesses sieving and packing facilities with an annual capacity of two million tons located in Iskenderun, Marmara and the Black Sea regions. In addition, it owns two factories for European-standard pressed coal production with an annual production capacity of 500,000 tons situated in Payas Organized Industrial Zone and Gebze Organized Industrial Zone. The Atakas Group was also involved in rebar production and marketing between 1975 and 2005. In 2007 it began construction works for a wharf in the Dortyol district of Hatay.