Kryvorizhstal
Encyclopedia
Kryvorizhstal is Ukraine's largest integrated steel company located in the Ukrainian
city of Kryvyi Rih
.
Bought in 2005 by Mittal Steel, the company is one of the most important businesses in Ukraine and a globally important steel producer. It is the largest steel manufacturer in Ukraine and largest manufacturer of both reinforcing bar and wire rod in the former Soviet Union. The company also produces processed iron ore concentrates for both own use and market.
In 2004, Kryvorizhstal produced about 7.08 million tonnes of crude steel. As of 2005, the company employed about 57,000 people. The company controls around a fifth of Ukraine's steel market.
region (as well as in the whole Ukraine). It was built as an integrated mining and metallurgy plant , comprising:
Company's iron ore needs are satisfied by both its own processing and the supply by other ore companies of Kryvyi Rih. Instead, Kryvorizhstal sells part of its processed ore on the market.
has been known since at least 1781 and was rumoured before; being known to the ancients. Throughout the 1800s the region was investigated for its mineral wealth. Iron ore of 70% iron content and manganese ores were found. In 1881 the industrial extraction of iron ore from the near region began, alongside other developments such as the construction of the Kryvyi Rih railway. By 1884 over 100,000 tons of iron ore had been extracted, and the railway though Kryvyi Rih (the Yekateryninska railway), 477 versts (505,6 km) long, from Yasynuvata
station via Kryvyi Rih to Dolynska
station had been opened. The production expanded rapidly in the next years, as it did in other industrialized regions and countries. By 1896 there were 20 mines producing over 1,000,000 tonnes of ore in the Kryvyi Rih Basin, and the population had exploded though the toll on the health of the working men had begun to be noticed. Industrial expansion continued in the region up to 1917. Production dropped during the first world war due to lack of labour.
- Grigori (Sergo) Ordzhonikidze signed a decree ordering its construction and the same year the foundation stone of the metallurgical works was laid, workers included prison labourers, and initially German and Americans as well. In August 1934 the first metal was produced at Kryvorizhstal; then known as 'Krivoy Rog Metallurgical Combine' (криворожский металлургический комбинат)
Before the onset second world war the works operated 3 blast furnaces (of 3,160m3) and 2 open hearth furnaces along with a heat and power plant, in 1941 a blooming mill of 1.7million tonnes p.a. and a fourth blast furnace and a third open hearth furnace came on line shortly before nazi occupation.
Prior to occupation by German military forces equipment and workers were evacuated to Nizhny Tagil
, the plant being occupied from the 14th of August 1941 to the 22nd of February 1944, the plant being destroyed.,
After the recapture of the area the complex was rebuilt, and continued to grow again; blast furnace No.7 was built in 1962, in 1970 blast furnace No.8 was built making the plant the largest in Europe, and in 1974 blast furnace No.9 was opened the biggest in the world with a volume of 5000m3.
In 2004 the organisation became a public company and was privatised.
in June 2004 for a sum of US$800 million, against a government-set reserve price of USD714 million, to a consortium called Investment-Metallurgical Union. This consortium was made up of Rinat Akhmetov
's SCM
and Interpipe Group
, controlled by then-President Kuchma
's son-in-law Viktor Pinchuk
. Offers exceeding USD1 billion from foreign investors were rejected on a technicality. The deal has been widely criticized by the opposition and abroad as an example of corruption
and state property mismanagement.
By initiative of the new President Viktor Yushchenko
, the privatization deal was dismissed by the court in June 2005, in order to sell the company again in a fair auction.
The bidding process was broadcast live on Ukrainian television, while President, Prime Minister Yuri Yekhanurov and former Prime Minister Yulia Tymoshenko
were following the process from the next room.
In 2006 the company was remamed "Mittal Steel Kryvol Rog" (Ukrainian : ВАТ Міттал Стіл Кривий Ріг), later in 2007 after the takeover of Arcelor
by Mittal steel to form ArcelorMittal the company was renamed Arcelor Mittal Kryvyi Rih.
However, there were some conditional commitments for sale the agreement that had to be fulfilled by Mittal Steel, such as technical and environmental improvements to the installation (upgrading the coking plants and desulfurisation), as well as social improvements (the allocation of funds to improve social and living conditions of workers at 0.5% of the sum of the sold products per year). On 14 July 2008, the Ukrainian Property Fund has sent the Ukrainian government a letter informing it about several investment commitments that were not fulfilled in 2007 by Mittal Steel Germany GmbH and asks the International Arbitrary Court at the Commercial Chamber of Ukraine to decide on the annulment of this agreement.
Ukraine
Ukraine is a country in Eastern Europe. It has an area of 603,628 km², making it the second largest contiguous country on the European continent, after Russia...
city of Kryvyi Rih
Kryvyi Rih
Kryvyi Rih or Krivoy Rog is a city in central Ukraine. It is situated in Dnipropetrovsk Oblast, to the southwest of the oblast's administrative center, Dnipropetrovsk, at the confluence of the Inhulets and Saksahan rivers...
.
Bought in 2005 by Mittal Steel, the company is one of the most important businesses in Ukraine and a globally important steel producer. It is the largest steel manufacturer in Ukraine and largest manufacturer of both reinforcing bar and wire rod in the former Soviet Union. The company also produces processed iron ore concentrates for both own use and market.
In 2004, Kryvorizhstal produced about 7.08 million tonnes of crude steel. As of 2005, the company employed about 57,000 people. The company controls around a fifth of Ukraine's steel market.
Production
Located fully in Kryvyi Rih, Kryvorizhstal is the largest and most up-to-date steel company in the KryvbasKryvbas
Kryvbas Kryvorizkyi Iron Ore Basin) is an important economic region in central Ukraine, specializing in iron ore mining and the steel industry. It is arguably the main iron ore region of Eastern Europe...
region (as well as in the whole Ukraine). It was built as an integrated mining and metallurgy plant , comprising:
- iron ore mines
- ore processing factories
- coke-processing, oxygen and other auxiliary metallurgical facilities
- metal fusion workshops of different types
- metal-rolling workshops
Company's iron ore needs are satisfied by both its own processing and the supply by other ore companies of Kryvyi Rih. Instead, Kryvorizhstal sells part of its processed ore on the market.
Background
The presence of iron ore in the regions around Kryvyi RihKryvyi Rih
Kryvyi Rih or Krivoy Rog is a city in central Ukraine. It is situated in Dnipropetrovsk Oblast, to the southwest of the oblast's administrative center, Dnipropetrovsk, at the confluence of the Inhulets and Saksahan rivers...
has been known since at least 1781 and was rumoured before; being known to the ancients. Throughout the 1800s the region was investigated for its mineral wealth. Iron ore of 70% iron content and manganese ores were found. In 1881 the industrial extraction of iron ore from the near region began, alongside other developments such as the construction of the Kryvyi Rih railway. By 1884 over 100,000 tons of iron ore had been extracted, and the railway though Kryvyi Rih (the Yekateryninska railway), 477 versts (505,6 km) long, from Yasynuvata
Yasynuvata
Yasynuvata is a city in Donetsk Oblast of south-eastern Ukraine, and the administrative center of the Yasynuvatsky Raion. It is located 21 km from Donetsk, the administrative center of the Donetsk Oblast. As of 2004, the city's population is 37,000. Yasynuvata is a large railway crossroad.It...
station via Kryvyi Rih to Dolynska
Dolynska
Dolynska is a city in Kirovohrad Oblast of Ukraine. Population is 18,768 ....
station had been opened. The production expanded rapidly in the next years, as it did in other industrialized regions and countries. By 1896 there were 20 mines producing over 1,000,000 tonnes of ore in the Kryvyi Rih Basin, and the population had exploded though the toll on the health of the working men had begun to be noticed. Industrial expansion continued in the region up to 1917. Production dropped during the first world war due to lack of labour.
Foundation and growth in Soviet Russia
After the formation of the Soviet Union and the expulsion of Austro-Hungarian forces and then anti-communist forces under Anton Denikin occupying the region relative normalcy was resumed. Planning for the plant began in 1929, with the intention being to produce an integrated steel plant taking iron ore and carbon all the way to finished steel products. In 1931 the chairman of the Supreme Economic Council of the USSRSupreme Soviet of the National Economy
Supreme Soviet of the National Economy, Superior Soviet of the People's Economy, Vesenkha was the superior state institution for management of the economy of the RSFSR and later of the Soviet Union...
- Grigori (Sergo) Ordzhonikidze signed a decree ordering its construction and the same year the foundation stone of the metallurgical works was laid, workers included prison labourers, and initially German and Americans as well. In August 1934 the first metal was produced at Kryvorizhstal; then known as 'Krivoy Rog Metallurgical Combine' (криворожский металлургический комбинат)
Before the onset second world war the works operated 3 blast furnaces (of 3,160m3) and 2 open hearth furnaces along with a heat and power plant, in 1941 a blooming mill of 1.7million tonnes p.a. and a fourth blast furnace and a third open hearth furnace came on line shortly before nazi occupation.
Prior to occupation by German military forces equipment and workers were evacuated to Nizhny Tagil
Nizhny Tagil
Nizhny Tagil is a city in Sverdlovsk Oblast, Russia, situated east of the virtual border between Europe and Asia. Population: -History:...
, the plant being occupied from the 14th of August 1941 to the 22nd of February 1944, the plant being destroyed.,
After the recapture of the area the complex was rebuilt, and continued to grow again; blast furnace No.7 was built in 1962, in 1970 blast furnace No.8 was built making the plant the largest in Europe, and in 1974 blast furnace No.9 was opened the biggest in the world with a volume of 5000m3.
Post Ukrainian independence
In 1996, restructuring took place, combining the mining and ore concentrating unit Novokrivorozhsky GOK (Новокриворожский ГОК (НК ГОК)) (NK-GOK) with the Krivoy Rog State Mining and Metallurgical Combine ("Krivorozhstal") (Криворожского государственного горно-металлургического комбината "Криворожсталь") into one unit. The Krivorozhsky coking plant (Криворожский коксохимический завод (ККХЗ)) was included in the group in 1997, forming the "Novokrivorozhsky mining and processing combine and Krivoy Rog coking plant" (Новокриворожский горно-обогатительный комбинат и Криворожский коксохимический завод «Криворожсталь») or simply "Kryvoriszhstal". Technically this was simply a paper exercise, the three units had been always been designed to work in concert, and the factory facilities were on the same site.In 2004 the organisation became a public company and was privatised.
First privatization, 2004
Kryvorizhstal became internationally known when it was privatizedPrivatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
in June 2004 for a sum of US$800 million, against a government-set reserve price of USD714 million, to a consortium called Investment-Metallurgical Union. This consortium was made up of Rinat Akhmetov
Rinat Akhmetov
Rinat Leonidovych Akhmetov is a Ukrainian businessman. He is the founder and President of System Capital Management, and is ranked among the wealthiest men in the nation. Akhmetov is also the owner and President of the Ukrainian football club Shakhtar Donetsk...
's SCM
SCM Holdings
System Capital Management or SCM is a major Ukrainian financial and industrial holding company with headquarters based in Donetsk in the east of the country. The business is controlled by a Ukrainian businessman Rinat Akhmetov who owns 100% of the company shares...
and Interpipe Group
Interpipe Group
Interpipe Group, or simply Interpipe is the influential Ukrainian business group founded and mostly owned by local business oligarch Viktor Pinchuk. The group focuses on steel industry , although indirectly controlling assets in various fields of industry, services and media...
, controlled by then-President Kuchma
Leonid Kuchma
Leonid Danylovych Kuchma was the second President of independent Ukraine from 19 July 1994, to 23 January 2005. Kuchma took office after winning the 1994 presidential election against his rival, incumbent Leonid Kravchuk...
's son-in-law Viktor Pinchuk
Viktor Pinchuk
Victor Pinchuk is a Jewish-Ukrainian businessman and philanthropist. Forbes ranked him # 336 on the list of the wealthiest people in the world, with a fortune of $3.3 billion...
. Offers exceeding USD1 billion from foreign investors were rejected on a technicality. The deal has been widely criticized by the opposition and abroad as an example of corruption
Political corruption
Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by...
and state property mismanagement.
By initiative of the new President Viktor Yushchenko
Viktor Yushchenko
Viktor Andriyovych Yushchenko is a former President of Ukraine. He took office on January 23, 2005, following a period of popular unrest known as the Orange Revolution...
, the privatization deal was dismissed by the court in June 2005, in order to sell the company again in a fair auction.
Second privatisation, 2005
Mittal Steel acquired the 93.02 percent stake in Kryvorizhstal on October 24, 2005, for 24.2 billion hryvni (US$4.81 billion). This price was more than twice the starting price and far exceeded analyst predictions of $3 billion, making it the largest privatization deal in the former Soviet Union, and arguably in the world.The bidding process was broadcast live on Ukrainian television, while President, Prime Minister Yuri Yekhanurov and former Prime Minister Yulia Tymoshenko
Yulia Tymoshenko
Yulia Volodymyrivna Tymoshenko , née Grigyan , born 27 November 1960, is a Ukrainian politician. She was the Prime Minister of Ukraine from 24 January to 8 September 2005, and again from 18 December 2007 to 4 March 2010. She placed third in Forbes Magazine's List of The World's 100 Most Powerful...
were following the process from the next room.
In 2006 the company was remamed "Mittal Steel Kryvol Rog" (Ukrainian : ВАТ Міттал Стіл Кривий Ріг), later in 2007 after the takeover of Arcelor
Arcelor
Arcelor S.A. was the world's largest steel producer in terms of turnover and the second largest in terms of steel output, with a turnover of €30.2 billion and shipments of 45 million metric tons of steel in 2004...
by Mittal steel to form ArcelorMittal the company was renamed Arcelor Mittal Kryvyi Rih.
However, there were some conditional commitments for sale the agreement that had to be fulfilled by Mittal Steel, such as technical and environmental improvements to the installation (upgrading the coking plants and desulfurisation), as well as social improvements (the allocation of funds to improve social and living conditions of workers at 0.5% of the sum of the sold products per year). On 14 July 2008, the Ukrainian Property Fund has sent the Ukrainian government a letter informing it about several investment commitments that were not fulfilled in 2007 by Mittal Steel Germany GmbH and asks the International Arbitrary Court at the Commercial Chamber of Ukraine to decide on the annulment of this agreement.
External links
- Official site www.arcelormittal.com.ua
- Photos of Coking Plant, Blast Furnace No.9, Iron Ore Strip Mine and Blooming Mill.