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Voestalpine in advanced talks to sell majority stake in Texas plant

Published 04/10/2022, 04:47 PM
Updated 04/10/2022, 06:26 PM
© Reuters. FILE PHOTO: An illuminated logo of steelmaker Voestalpine stands in front of the steel plant Donawitz in Leoben, Austria, August 09, 2019. REUTERS/Lisi Niesner

ZURICH (Reuters) - Austrian specialty steelmaker Voestalpine is in advanced talks to sell a majority stake in its Texas plant, it said on Sunday.

"In recent months, voestalpine has been conducting an open-ended market sounding to stabilize the business model of its direct reduction plant in Corpus Christi, Texas," the Austrian firm said in a statement. "As a result of this examination, voestalpine is currently in negotiations to sell 80% of its shares in voestalpine Texas."

Talks were at an advanced stage, it said, without disclosing a potential sales price.

Voestalpine announced plans to invest 550 million euros in a state-of-the-art plant in Corpus Christi in 2013.

The $1 billion plant in Corpus Christi opened in October 2016, with an annual capacity of 2 million tonnes of high-quality hot briquetted iron, or sponge iron, a pre-material used in steel production.

However, the plant has since faced setbacks ranging from construction delays to cost overruns totaling more than a billion dollars, as well as a challenging market situation amidst the COVID-19 pandemic.

Following write-offs, the Texas operation was valued at 448 million euros, Chief Financial Officer Robert Ottel said in November 2020.

© Reuters. FILE PHOTO: An illuminated logo of steelmaker Voestalpine stands in front of the steel plant Donawitz in Leoben, Austria, August 09, 2019. REUTERS/Lisi Niesner

Voestalpine recognised an impairment loss of 163 million euros on the Texas operations for its 2020-21 reporting year, as the plant was confronted with "sharply lower" demand.

However, during the first three quarters of its current 2021-22 reporting year, the Texas plant had benefited from "good demand for steel in North America," the Austrian firm said in February, when it said it expected full-year earnings across the group at the upper end of its forecast.

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