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  • December 4, 2023
  • News

LIBERTY Ostrava update

Like many other energy-intensive companies in Czechia, LIBERTY Ostrava has faced some major operational and financial issues over the last few years, exacerbated by the challenges faced by the European steel market.

To mitigate the impact of those issues the business has already carried out a number of major projects: closing one of Ostrava’s three coke batteries; initiating a temporary idle of its second Blast Furnace; ceased production of unprofitable products and focused on profitable ones, which enable its rolling mills to operate with higher capacity and profitability.

The business has also made good progress on its optimisation plan, which will involve the restart of Blast Furnace No.3 and the ramping up of the steel works, which aims to ensure the business is positioned for long-term success for the benefit of all stakeholders.

To allow the business to finalise and execute that plan, a specific creditor moratorium has been granted against its energy supplier. The moratorium is allowed under a Czech law (Law No. 284/2023) which came into effect on 23rd September this year and allows troubled Czech companies to restructure outside formal insolvency proceedings with the help of new “preventive restructuring” rules. The new Czech rules implement a dedicated EU directive on preventive restructuring. This specific moratorium aims to allow LIBERTY Ostrava to negotiate terms on securing energy at normal market rates.

The focus on securing normal market rates is because Ostrava’s energy costs per tonne of steel have risen 340% since the plant was acquired in July 2019. This has meant that its average direct energy cost is now 16% of its variable cost per tonne of steel, up from 8% in 2019, which combined with other input cost rises and high inflation means that it is almost impossible for LIBERTY Ostrava to produce steel at a price which allows it to compete effectively with foreign competitors.

The optimisation process will continue to be run by Theuns Viktor, supported by Pavel Sedivy (our Managing Director Plant Operations) and his management team, as well as a number of global specialists from across LIBERTY. The business will continue to pay salaries, wages and benefits as well as continuing to provide the same high level of customer service.

The moratorium only concerns LIBERTY Ostrava, which remains solvent, does not impact day-to-day operations and will not impact other creditors or our commitment to our employees or the Ostrava community.

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