It is reported that the new owner of Sri Lanka’s former Ceylon Steel Corporation said will upgrade the facility to produce TMT steel and will turn around the debt laden steel producer in four years.
The Ceylon Steel Corporation was originally sold to South Korea’s Doosan Group and renamed Ceylon Heavy Industries and Construction Co. Last week the country’s biggest steel producer changed hands again with another load of debts. This time the buyer is a Sri Lankan businessman with steel and construction related interests in the United Arab Emirates.
The new owner Mr Nandana Lokuwithana bought the company at the invitation of the government.
The transfer will bring USD 65 million into the company over the next two and a half years to upgrade, increase capacity and pay off debts.
Mr Lokuwithana who is the Chairman of the Onyx Group based in the UAE said that “The total investment in the company will come to USD 65 million. We will make this investment over a period of two to two-and a half years. We are hoping to break even and show profits within four years.”
Mr Lokuwithana said that “Steel prices went up from about USD 600 per MT to about USD 1,200 at one point. So the company bought up stocks in case there was a shortage, but towards the end of the year, the prices crashed to about USD 350 to USD 400 per MT. So the company was left with a loss of about USD 24 million. But this tends to be the nature of the industry. It is now recovering again.”
The new management plans to upgrade and expand production facilities to ride the reconstruction and development wave that is expected to start from 2010. With large scale government infrastructure projects that are due to be rolled out, and private sector development activity, demand for steel in Sri Lanka is expected to increase rapidly from next year.
Mr Lokuwithana said that “We are expecting demand for steel to increase by 10% to 12% in 2010 and then continue to increase for a few years. So we are planning to increase output from about 90,000 MT now, to about 250,000 MT over the next two and a half years. Most of this, 70%, will be TMT steel. We will also set up a cut-and-bar plant.”
(Sourced from http://www.steelguru.com/news/index/2009/10/05/MTE0NjM5/Onyx_Group_to_upgrade_CHICO_facilities.html)
Sunday, October 4, 2009
Onyx Group to upgrade CHICO facilities
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