ArcelorMittal Deals “Unfair Blow” To Romanian Business – Harbor Admins

"ArcelorMittal Galati has no economic argument to set up a raw material supply line through Burgas- Bystroe canal, setting aside the Constanta-Danube-Black Sea canal. Reality goes against any and all arguments put forth by Thierry Le Gall (CEO of the southeast division within ArcelorMittal)", said a joint press release issued by the National Maritime harbors Administration, Navigable Canals Administration and Comvex, all based in eastern Romanian city Constanta.

The total cost of using Constanta reaches EUR5.77 per ton, including fees and cargo insurance, while transit costs using Burgas range between EUR16.13 and EUR19.13 per ton, according to the quoted source.

The three companies thus replied to the statements made last week by Le Gall, when he rejected Comvex’s accusations according to which ArcelorMittal uses the Burgas harbor to import raw materials, instead of using Constanta, thus violating competition rules and regulations.

Le Gall said the decision was made solely on economic criteria, because ArcelorMittal failed to conclude a strong and secure contract with Comvex, because the harbor operator increased fees four times in five years.

Le Gall said the company needed to find an alternative, and the only issue with Comvex was the one concerning security. According to Le Gall, Comvex applies prices higher than the ones on the international harbors market.

In addition, the Comvex terminal vowed in contract to supply ArcelorMittal, the largest steel processing group in the world, a cargo unloading speed of 45,000 tons per day, whereas the technical conditions at the BUrgas terminals do not allow unloading speeds higher than 20.000 tons per day.

The three companies said the Burgas airport can only host ships with low tonnage, 80,000 tons, which adds EUR6-9 for each ton of ore, while the Constanta harbor can host ships with tonnages of up to 220,000 tons.

In addition, the unloading speed for ArcelorMittal transports in Constanta is higher than the one in Rotterdam, namely 45,000 tons per day, compared to 40,000 tons per day, and the prices are "perfectly equivalent and showing the efficiency of the two harbors on the international market,” according to the press release.

The three companies signing the document feel ArcelorMittal’s refusal to use the Constanta harbor for its Eastern Europe plants is "a clearly unfair blow dealt to Romanian business."

The document also states that Arcelor Mittal Galati has multiple guarantees of security for business relations in the Constanta port.

The first is supplied by the 30-year association contract concluded between SIDEX Galati (later renamed ArcelorMittal Galati) and Comvex, through which the steel processor and the harbor operator have installed, with bilateral contribution, unloading equipment worth over $21 million, used mandatorily with priority for raw material supplied to ArcelorMittal.

Secondly, even for harbor operations unfolded by Comvex with other clients the company uses the equipment set up jointly with ArcelorMittal.

"Form this use of the equipment ArcelorMittal has won and wins money. This is also happening in 2009, proof being the invoices issued by ArcelorMittal and paid by Comvex throughout time," the document reads.

In addition, one company of the ArcelorMittal group is a stakeholder and beneficiary in the profits obtained by Comvex.

Comvex is owned, with a stake of 53.94% by Solidmet Bucharest, a company where two individuals, Liviu-Marin Muntean and Corneliu Idu, hold 55% of the capital. The shareholder structure also includes Expert Placement Services, a subsidiary of ArcelorMittal, which holds close to 36% of shares.

The Constanta harbor authorities announced Thursday in a press conference that ArcelorMittal has decided to suspend the import of raw materials through the Constanta harbor and the Danube-Black Sea Canal, beginning to use the Burgas harbor in Bulgaria. According to them, the company’s decision is "a hostile economic action against Romania."

The harbor authorities in Constanta said they have notified the problem to the Competition Council and the Ministries of Economy and Transports.

Comvex was established in 1991, being the largest bulk handling terminal in Black Sea area. Comvex terminal is specialized in handling, storing and transshipment of dry bulk minerals such as iron ore, coal, coke and bauxite.

ArcelorMittal, the world's number one steel company, owns in Romania four steel plants, namely ArcelorMittal Tubular Products Roman, ArcelorMittal Galati, ArcelorMittal Tubular Products Iasi and ArcelorMittal Hunedoara, the harbor operator Romportmet Galati, as well as the local unit of construction company ArcelorMittal Construction.

ArcelorMittal launched a takeover offer for Comvex, but the offer is currently suspended due to several trials.

 

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