Astra Resources takes first step in acquisition of Hungarian steel works

Diversified global resource company, Astra Resources (Frankfurt: 9AR) has taken a significant first step in acquiring a steel works in Hungary, when finalised would result in an addition to Net Present Value for Astra.

Astra has received a letter of intent for the sale of the assets of Hungarian steel works, DAM Steel Rt.
The deal would include ownership of an energy supply company on the site.

The sale is expected to close in coming months with final acquisition of the steel mill to include ownership of an energy supply company on the site.

The acquisition would be funded by Astra’s planned prospectus capital raising or by independent project finance.

The steel acquisition would enable Astra to supply sought after premium quality steels to European markets.

Current plant infrastructure and assets includes a five-stage ASEA-SFK ladle furnace and associated technologies suitable for the manufacture of premium grade steels. 

Following the finalisation of the acquisition, Astra will refurbish the plant before bringing it back into operation.

In addition the acquisition will include an integrated research and development centre where T-Steel will be further developed for special high reliability applications.

The energy supply company will provide power to the steel mill and other companies in the area, resulting in a separate profit centre.

Hungarian steel works

Hungarian steel works is a prospective growth hub for Hungary, with the steels produced by the mill utilised for the critical high stress, high usage, high mass components where 100 per cent reliability is demanded, such as automotive body and mechanical manufacturers.

Major steel suppliers to the automotive industry have acknowledged the quality of the steels produced by the steel facility in the past, and the expertise of the proposed technical staff.

Operating costs will compare more than favourably with current low cost steel producers elsewhere in the world the company said.

The Hungarian steel works have a long history of producing high grade steels and a number of potential users have welcomed the planned re-opening of the factory, indicating their intention to purchase close to the full initial output of the plant.
The T-Steel technology was developed at the Hungarian steel mill to be acquired by Astra.

Astra CEO

Astra CEO Dr Jaydeep Biswas says finalising this acquisition will result in a major NPV addition to Astra.

“The proposed acquisition, which will be funded by Astra’s proposed prospectus capital raising or independent project finance from financial institutions who are currently dealing with the company, will place Astra in a prime position to be able to supply much sought after and extremely profitable premium quality steels to the European region, and also to other world markets,” Dr Biswas says.

“The steel types to be produced by Hungarian steel works will include the premium grade extra low carbon content stainless steel and premium grade, high category, high purity, high durability, ball bearing steels, amongst others.

“Major steel buyers have already requested steel off-take agreements, with Astra’s subsidiary, Astra Mining Hungary, which is also currently conducting high level negotiations concerning the establishment of an integrated product manufacturing hub where the Hungarian steel works would have a financial interest in a number of key ‘green’ transport infrastructure developments.

“These include railway infrastructure, such as the high speed running gear sub-assemblies and the manufacturing of rails, which will be suitable for speeds in excess of 160 kilometres per hour.

“The rail development projects are aimed at speeding up the movement of freight in the European region, resulting in a decrease of pollution and other environmental problems caused by road freight, and will be able to qualify for major European Union funding support.”

 Dr Biswas says the proposed acquisition, upgrading and refurbishment cost ratios are extremely favourable especially in comparison to either building or acquiring a new factory.

“Astra has the advantage of being able to receive quality returns on its proposed investment acquisition in a relatively short time because the plant will be able to resume production within 12-24 months after the acquisition is completed,” Dr Biswas says.

“In comparison to some other steel manufacturers, Astra has access to a large pool of engineers and metallurgists, all of whom have decades of experience in steel manufacturing.”

Astra Managing Director Silvana De Cianni says the financial structure of the proposed assets purchase will allow Astra to operate the mill with a high quality, experienced labour force, headed by our key staff in Hungary who operated the steel plant prior to its closure.

“In doing so, operating costs will compare more than favourably with current low cost steel producers elsewhere in the world,” Ms De Cianni says.

Ms De Cianni says Astra has documentation to this effect, with these documents covered by non-disclosure and confidentiality agreements; however confirmations are expected in the very near future.

“One of the inherent benefits of the Hungarian steel works proposed acquisition is that it is the mill where the T-Steel technology was developed.

“Our key staff in Hungary, which include the senior metallurgists who spent over thirty years on the testing and development of the technology, have extensive experience operating the plant to produce the premium category high grade steels as well as the  T-Type steels.

“The initial and guaranteed market will serve as a parallel springboard for the quick introduction of the higher quality and more profitable T-Steel products.

“It is expected that major customers will be able to be fully converted to T-Steel within 12-24 months.”

T-Steel

The development of T-Type steels stretches back to the late 1970’s. Following initial laboratory research, the applications were entrusted to a number of senior and trustworthy metallurgists and engineers in the DAM Steel Works.

The T-Steel technology was further developed in order to produce steels with even higher specifications than the standard, premium grade steels, but was never marketed under that name.

Further development in an actual manufacturing environment was carried out on a “no cost spared” basis, with the general directive that the quality had to be equal to or better than what was manufactured in the United States and Germany.

The complete data concerning the in-depth details of the particular steel manufacturing process, and the recipients, now forms part of the Intellectual Property of which Astra owns 45 per cent.

The T-Steel technology  will enable products to be manufactured in both older and newer factories without major capital expenditure.

Astra Resources’ global portfolio includes gold interests in Southeast Asia, coal mines in Africa, iron ore in India and the Philippines, the production of the high-strength T-Steel technology in Hungary, and the provision of mining services housing in Rockhampton, Queensland.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/24040/astra-resources-takes-first-step-in-acquisition-of-hungarian-steel-works-24040.html