Chinese Loan to Finance Long-awaited Modernization of Dunaújváros Steel Factory

The first positive news in months comes from Liberty Steel, buying the assets of Dunaferr, a major player in Hungarian heavy industry and the region’s largest employer. Thanks to an agreement in principle, it looks like that Liberty Steel will be able to finance the long-awaited modernization of the ironworks with a Chinese gigabank loan.

China Export & Credit Insurance Corporation (Sinosure) have reached an agreement in principle to guarantee a loan of EUR 1.3 billion, the British-Indian company that owns the Dunaújváros (central Hungary) ironworks told Világgazdaság.

The agreement in principle will facilitate the acquisition of additional grants and guarantees to finalize the capital structure of the investment.

With the commissioning of the new facility, the increasingly obsolete coal-based steel production methods will be replaced by the latest sustainable steel production technology. It is promised that the two new 150 ton capacity electric arc furnaces (EAFs), together with the upgraded secondary metallurgical plant, will be able to recycle steel scrap and directly reuse reduction iron pellets.

The EUR 1.3 billion investment package includes the modernization of the existing hot rolling mill and galvanizing line, as well as the installation of new production lines to serve the Hungarian manufacturing bases for defense and automotive production.

The announcement is said to coincide with a visit by Sinosure representatives to Liberty Dunaújváros. The Chinese company will continue the technical and feasibility studies already underway before finalizing the manufacturing specifications for the new ultra-modern steel plant, which will be suitable for green steel production.

Thomas Gangl, CEO of Liberty Steel Europe, said: “We have reached an important milestone that will lay the foundation for Liberty’s Dunaújváros mill to become a modern green steel plant at the forefront of sustainable steel production technologies.”

Gergely Fábián, State Secretary for Industrial Policy and Technology, noted: “I am constantly following the progress of the green steel project, the result of the coordinated efforts of the Liberty team and other experts involved in its implementation. This attention is justified by the strategic importance of the project for the national economy.”

At the beginning of July, it was reported that

the steel industry was “still not out of the woods,” which is fundamentally rewriting the plans of Liberty Steel, one of the largest steel companies in the region and also seen as the savior of Dunaferr.

Liberty Steel’s factory in Ostrava, Czech Republic, recently entered liquidation proceedings after months of severe financial difficulties. In December 2023, unpaid bills led to a dispute with its electricity supplier, Tameh Czech, which, in addition to declaring bankruptcy, refused to supply the factory with energy. The company’s problems are not unknown in Hungary either: almost on the same day as the events in the Czech Republic, the steel giant announced that it would start shutting down two of its coke ovens in Dunaújváros.

Last August, Liberty Steel won the tender for the new companies that will own the steel assets of Dunaferr in Dunaújváros, which is in liquidation. Dunaferr became insolvent by the end of 2022 due to the conflict between its Russian and Ukrainian owners, and the inability to operate was prevented by government intervention and Liberty’s coal supplies. Since then, contradictory reports have emerged from time to time about the future of the ironworks, but the government has repeatedly stated that “if it were not for Liberty, there would be no ironworks today”.

Via Világgazdaság; Featured image via Pixabay