A Tirana court has started to examine the bankruptcy filing for Kurum, one of the largest steel producers in Southeast Europe.
The company, which is a unit of Turkey’s Kurum Holding, unexpectedly filed for bankruptcy in 2015. Kurum faced huge competition mainly from China, which produces steel at lower costs.
Kurum filed for bankruptcy as it was unable to repay loans from several banks, and a decision is expected in the next few days, local media reported on March 17.
Just one year earlier, Kurum claimed to be the largest producer of steel in the Balkans and the biggest exporter in Albania with revenues of €195mn, broadcaster Top Channel reported.
However, hit by the global crisis in the sector, Albania’s Kurum started to cut its staff rapidly, shedding 700 employees. By the second half of 2015, it employed less than 200 people.
According to the company’s 2014 financial report, Kurum owed over €110mn in bank loans.
Turkey's Kurum acquired the Elbasan Steel Works in Albania in 1998. Kurum has one mill with capacity of 510,000 tpa. It was the first and only operator of an integrated single iron and steel production plant in the country.
In 2012, Kurum won a tender to purchase four operational state-owned hydropower plants in Albania - Uleza, Shkopeti, Bistrica I and Bistrica II - with total capacity of 76.5M. The privatisation was part of the liberalisation of the Albanian electricity sector, and the Albanian parliament ratified the sales agreement in February 2013.
The total cost of the project was estimated at €120mn, which included €109.5mn for the acquisition and the remainder for investments to rehabilitate the plants. The International Finance Corporation (IFC) approved a $44.9mn loan to Kurum in 2013.
Through the acquisition, Kurum was planning to reduce electricity purchase costs, which is a significant production cost item for the company, as well as to secure a reliable source of electricity in order to continue operations without major disruptions. According to Reuters, Kurum planned to increase its output by 20% after the purchase of the four HPPs.
The global steel industry is expected to make a very gradual recovery from a serious crisis largely blamed on Chinese companies selling surplus stocks of steel at low prices. This saw prices hit a 10-year low in 2015. On March 16, the price of steel was $50 per tonne.
Reuters reported on March 16 that steel company ArcelorMittal South Africa will hike its prices of steel as of April. The company defended its decision saying it is in line with global market development and after heavy losses due to competition from cheap Chinese imports.