Stemcor re-energises Georgian ferroalloys industry

Stemcor, the world’s largest independent steel trader, today announced that it has completed an investment project which has re-energised the ferroalloys industry in Georgia, the Caucasus.  Working closely with the Georgian government, Stemcor merged three separate organisations into one entity to create the largest industrial company in the country, which has now been sold as a going concern to a world leading producer of ferroalloys.

In December 2005, after due diligence including a detailed market study, technical analysis and environmental review, Stemcor agreed to finance the creation of a vertically-integrated ferroalloy producer as part of the Georgian government’s asset privatisation initiative. Stemcor then acquired the assets and operating licence of Chiatura Manganese Mine at public auction, arranged the privatisation of Vartshikhe Hydroelectric Power Plant and acquired a majority stake in Zestafoni Ferroalloys Plant. Outstanding debts were paid and, in December 2006, the three assets were successfully merged into Georgian Manganese, a single tax-efficient company with a tailored legal structure and no financial liability. Total investment was US$112m.

The establishment of Georgian Manganese secured 7,000 jobs in a healthy business with strong potential for wealth creation. Demand for exports increased and ferroalloy prices doubled within the first year. The sale of the business, part of a predetermined exit strategy, now hands a robust company with long term growth prospects to a qualified buyer with an active interest in running the business.

Georgia is moving up the Financial Times league table of best countries to do business in and, in 2006, was nominated as the number one reformist country in the world. It is a free economic zone in which investors benefit from advantageous commercial legislation, no import or export tariffs and committed support from the government.