ESTAR's subsidiary Zlatoust Metallurgical Works (ZMZ), which is currently inactive, has announced that, according to steel industry experts, the salvation of the mill is possible only as part of the state-run steelmaker RusSpetsStal, which in turn is part of Russian state corporation Rostekhnologii.
Accordingly, as part of RusSpetsStal, ZMZ would be able to save its 5,500 jobs, reach the point of profitability, and, in the event of improved finances, to reconstruct its production facilities and expand the range of its products. In addition, RusSpetsStal would be able to secure ZMZ orders from the defense, nuclear power and machine building industries. Moreover, most of ZMZ's customers are part of the Rostekhnologii corporation.
Another advantage of being a part of RusSpetsStal, is that ZMZ would have greater opportunities to secure credit and guarantees and to receive state support to replenish its cash. According to forecasts, in the next three months ZMZ may secure state support which would be used for the replenishment of its cash flow and for the construction of its new electro-smelting shop No.4 and of its new rolling mill.
Chelyabinsk region governor Petr Sumin has agreed with the conclusions of the steel industry experts and intends to ask RusSpetsStal to take over ZMZ. According to some reports, RusSpetsStal will have to pay up to $500 million to repay the mill's debts and to invest in its recovery and development.
As SteelOrbis previously reported, ZMZ stopped its operations at the end of April this year. It is expected to remain idle until June 15 when it hopes to have collected a sufficient amount of orders to enable profitable operations.