18 Nov 2009 14:48

Turkish project could boost steel maker MMK's EBITDA 20% in 2010-2011

MOSCOW. Nov 18 (Interfax) - The MMK Atakas joint venture, between Russia's Magnitogorsk Iron & Steel Works (MMK) and Turkey's Atakas Group, could generate approximately $400 million in annual earnings before taxes, depreciation and amortization (EBITDA), and enable MMK, which is the controlling shareholder, to boost its own EBITDA by 20% in 2011-2012, Troika Dialog said in an analytical note.

The note said the format for the metallurgical complex, which will have small capacity and use scrap metal as feedstock, will be less profitable than the fully integrated plant in Magnitogorsk, where most capacity feeds on iron ore. Even so, flat products are in short supply in Turkey, which is a net importer, while one of the leading exporters of long products, and margins could still be on a par with those at the main site in Russia.

MMK has obtained long-term financing of EUR 384 million and $510 million from foreign banks for its Atakas project (50% + 1 share) in Turkey, which includes the construction of a full-cycle flat steel production plant with a seaport and service centers, and may have 2.3 million tonne of rolled steel capacity in 2010.

MMK said in October that the joint venture intends to commission all production sites related to the project by the end of 2010.

Overall project costs are $1.7 billion, including the main site in Iskanderun, two metal service centers - one in Iskanderun and the other in Istanbul - and a port capable of accepting ships with a displacement of up to 80,000 tonnes.

MMK has said the port at Iskanderun should be built by the end of 2009. It will have 1,800 meters of docks and will be capable of handling 12 ships simultaneously. The port should reach full capacity by the middle of next year.

MMK Atakas will produce up to 2.3 million tonnes of h/r sheet, 750,000 tonnes of c/r sheet, 900,000 tonnes of galvanized coils and 400,000 tonnes of coated sheet per year.