POSCO's Montenegro Move: Steel Symphony in the Adriatic

Zeljezara Niksic
Zeljezara NiksicImage Source: SEE NEWS

Synopsis:

South Korea's POSCO explores collaboration with Montenegro's EPCG Zeljezara Niksic for a potential lease of its steelmaking and forging capacities, reports See News. Montenegro aims to secure bids for the troubled plant's capacities to sustain steel production. Talks also include a potential partnership between POSCO and Montenegrin state-controlled power utility EPCG. Other contenders, including Safin Group, Duferco, and Trasteel, have expressed interest. The deadline for bids is January 25. The government seeks strategic alliances to revitalize EPCG Zeljezara Niksic, a critical asset acquired in December 2022.

Article:

In a diplomatic dance at the World Economic Forum in Davos, Montenegro's Prime Minister Milojko Spajic extended an invitation to South Korean steel giant POSCO for potential cooperation with EPCG Zeljezara Niksic. The Montenegrin government, eager to salvage the steel plant's production capacities, opened bids for leasing last month. The offer attracted interest from various international players, including Austria-based Safin Group, Luxembourg's Duferco, and Switzerland's Trasteel.

During discussions on the sidelines of the forum, Prime Minister Spajic and POSCO's Vice President Jaewan Lee explored possibilities for collaboration not only in steel production but also in conjunction with Montenegro's state-controlled power utility EPCG. This strategic alliance aims to infuse new life into the troubled plant and leverage synergies between steel and energy sectors.

EPCG Zeljezara Niksic, nestled in the city of Niksic, boasts two 60-tonne electric arc furnaces with a capacity to produce around 300,000 metric tons of crude steel annually. Faced with financial challenges, EPCG sought external investment to keep the steel production alive. The government's open call for bids signals a commitment to finding a reliable partner to oversee the plant's operations.

Besides POSCO's interest, Austria's Safin Group has engaged in talks with the Montenegrin energy ministry regarding the lease. Reports also suggest that Luxembourg's Duferco and Switzerland's Trasteel have thrown their hats into the ring. The diverse interest reflects the global importance of securing a foothold in the Adriatic steel market.

EPCG acquired Zeljezara Niksic from Turkey's Toscelik for €20 million ($22 million) in December 2022. The subsequent move to lease its capacities aims to ensure the sustained production of steel, safeguarding jobs and contributing to the local economy.

As the January 25 deadline for bid submissions approaches, the race to secure the lease becomes more intense. Montenegro, with its picturesque landscapes and strategic location, becomes the stage for a potential collaboration that could reshape the steel industry in the Adriatic region.

Conclusion:

Montenegro's pursuit of international partnerships to reinvigorate EPCG Zeljezara Niksic sees a promising turn with POSCO's interest. The diplomatic efforts at Davos underscore the urgency to secure a reliable lessee for the troubled steel plant. As the bidding deadline approaches, the global interest from industry leaders like POSCO, Safin Group, Duferco, and Trasteel signals the plant's strategic significance. The outcome of these negotiations holds the key to sustaining steel production in the Adriatic and revitalizing a crucial economic asset.

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