The Government of Kazakhstan has successfully completed negotiations with the ArcelorMittal Corporation, securing the transfer of ArcelorMittal Temirtau to Kazakhstan without spending a single tenge from the state budget, official information source of the Prime Minister of Kazakhstan reported. Minister of Industry and Construction Kanat Sharlapaev made the official announcement at a press conference, highlighting the significance of the agreement.
The negotiations stemmed from President Kassym-Jomart Tokayev's concerns over serious violations by ArcelorMittal Temirtau (AMT) of its investment and other obligations. The talks gained momentum after a tragic accident at the Lenin Mine, a subsidiary of AMT, on November 3.
Minister Sharlapaev revealed that specific requirements were put forward by the Kazakh government, leading to the signing of the Standstill Agreement on December 9, 2022. This agreement allowed Kazakhstan to conduct a comprehensive assessment and audit of the enterprise.
The negotiation process consisted of 11 rounds, with ArcelorMittal initially requesting $3.5bn, a figure deemed excessive by international consultants.
"Our goal was to acquire the plant at a fair price without subjecting ourselves to costly and protracted international litigation," Minister Sharlapaev explained.
The mega-deal, as described by the minister, carries exceptional importance for Kazakhstan. Three key elements of the transaction were outlined:
- Reduced Asset Value: The state successfully negotiated a reduction in the value of assets from $3.5bn to $286mn.
- Zero State Budget Expenditure: Notably, not a single tenge was spent from the state budget on the implementation of the transaction.
- Investor Obligations: The new investor committed to repaying a short-term loan of $250mn and a long-term loan of $450mn to the parent company ArcelorMittal within 4 years.
"We have avoided many of the risks faced by governments of other countries," Minister Sharlapaev underscored the significance of the agreement.
Importantly, the deal was reached within the legal framework and in full compliance with international law.
Furthermore, the Kazakh negotiating group convinced ArcelorMittal to contribute KZT 16bn ($34mn) to the "Kazakhstan Khalkyna" charitable foundation. This generous contribution aims to address pressing issues faced by residents of the Karaganda region and support socially significant projects. Half of this amount will be utilized in the city of Temirtau, demonstrating a commitment to local development.
ArcelorMittal in Kazakhstan
ArcelorMittal is a key player in Kazakhstan's steel and mining sector, utilizing locally extracted iron ore and coal to produce high-value flat and long steel products, as well as large-diameter pipes. Operating through ArcelorMittal Temirtau and ArcelorMittal Tubular Products Aktau, the company is a major contributor to the industry. ArcelorMittal Temirtau, the largest producer in the country, manages an integrated steel plant with an annual capacity of 4 mn tons of crude steel, producing a diverse range of steel products and operating coal and iron ore mines.
The company, part of ArcelorMittal since 1995, underwent a successful turnaround, stabilizing operations and implementing strategic initiatives for technological upgrades, improved health and safety, environmental performance, and long-term market competitiveness. This transformation has not only benefited the company but also served as a catalyst for the development of local small and medium businesses, revitalizing communities across the region.
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