GFG Alliance will invest €2bn ($2.16bn), to update its European steel mills in Romania and the Czech Republic, and increase their production, the steel company announced on Wednesday.
The British based privately held corporation, owned by Sanjeev Gupta, financed this area even though the sector is over-supplied and facing decreased demand, likely made worse by the effects of the coronavirus.
The company has been pressured by stakeholders who are concerned about climate change and the impact from steel plants, considering steelmaking accounts for approximately 7pc of greenhouse gas emissions. The upgrades announced for the Romanian and Czech Republic emission-heavy steel mills are a step towards alleviating these concerns.
Some of the money from GFG will go towards setting up electric arc furnaces (EAFs) at the mills in an effort to decrease emissions.
Of the total amount earmarked for the updates, GFG will invest €1bn at its Galati plant in Romania and €750mn at its Ostrava location in the Czech Republic, according to a statement by the company.
The installation of the EAFs are not expected to impact jobs, even though their operation involves fewer than half the manpower, since the blast furnaces that are currently operational will not be replaced, GFG indicated.
The investments will increase production to 4mn mt per year over time in Galati and could increase production by over 50pc in Ostrava.
GFG did not release production numbers, but Galati has capacity of 3.6mn mt and Ostrava’s capacity is 3mn mt. According to media reports, the plants are running below capacity, though exact numbers are unknown.
GFG said the remaining €250mn of the total investment would be distributed over its other European operations.
The company also announced earlier this week that it purchased a bankrupt steel plant in India for $60mn.
($1 = €0.93)