Weglokoks has agreed to lease bankrupt plate mill Huta Czestochowa, with production set to resume at the beginning of next year, the Polish state-owned coal exporter and steel fabricator tells Kallanish.

This will be done through newly created Weglokoks subsidiary Huta Czestochowa Sp. z o.o.

The lessee will ensure the production units are spared any damage during the winter season, it says, as well the “final settlement of ownership matters”. Control over the electric arc furnace-based plate maker will give Weglokoks supply of feedstock for its downstream steel operations, ensure more effective supply chain management and reduce dependence on external suppliers, it adds.

“We believe it’s a good opportunity and the right time for this acquisition,” says Weglokoks chief executive Tomasz Slezak. “It is in line with the logic of the group's steel segment development and enables significant optimisation and synergy benefits in a number of areas.”

He acknowledges that meeting the requirements of employees and stakeholders will not be easy in the current steel market “crisis conditions”. However, he points to the strong business case given Huta Czestochowa is Poland’s largest plate mill with a captive EAF.

The agreement with a state entity may come as a relief to Huta Czestochowa’s staff after three tumultuous years with private investor, Liberty Steel, at the helm. However, the negotiations took longer than expected partly because the mill requires the lessee to invest substantially in the restart of production, which has been idle since last year.

Moreover, the lease agreement has been signed for only four months, with the possibility of an extension, according to media reports. The Czestochowa mill’s administrator will now work on launching a tender for the sale of the company, which will not necessarily be to Weglokoks. Other firms will also be in the running.

A Liberty Steel spokesperson says the firm is "disappointed" by the decision and will "now review our options".

Czestochowa has a 700,000 tonnes/year EAF and 1.2 million t/y heavy plate capacity. Earlier this year, Weglokoks shelved its proposed EAF-based hot strip mill project in Ruda Slaska, proposed by Poland’s previous government, and made no secret of its intentions towards Czestochowa. Slezak pointed out the mill would be a valuable asset given the expected increase in demand from Polish offshore wind power investments and for defence purposes.

Weglokoks' steel subsidiaries are service centre and welded pipemaker Huta Labedy, heavy plate producer Walcownia Blach Grubych Batory (WBG), and stockist and fabricator Huta Pokoj.