NewsThree companies compete for lease of Steel Mill: Negotiation process underway

Three companies compete for lease of Steel Mill: Negotiation process underway

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“All three companies that applied for the international public tender for leasing the Steel Mill and Forge have submitted supplementary offers, after which the negotiation process will follow, as reported by Elektroprivreda (EPCG) to Vijesti.

The companies involved are 8B Capital S.A. from Switzerland, and two consortia consisting of Chinese Universal Energy, Czech Energy & Industrial Management Advisory Services, and Montenegro’s Neksan, as well as Kvalitets Bygg-Uber Nordic from Sweden.

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EPCG explained that the offers should be specified and supplemented in accordance with the established criteria and scoring methodology.

“A commission of seven members was formed immediately after the announcement of the public tender by representatives of the Ministry of Energy Development, EPCG, and the Steel Mill. After opening the bids and conducting the methodological scoring procedure based on established criteria, we enter into direct individual negotiation procedures with each of the relevant bidders, who will, in coordination with all relevant institutions, determine the ranking and decide on the further course towards the final decision,” said EPCG.

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They added that there is no time limit for the final decision on choosing the best bidder, and the lessor retains the right to choose the best bidder after individual direct negotiations with the bidders from the ranking list.

The consortium including Neksan, led by Miodrag Daka Davidović, offers just over 30,000 EUR for monthly lease over a period of 35 years, with planned investments of 40 million EUR over five years, along with the possibility of additional investments, as well as the production of green steel and electrical energy.

The Swedish consortium Kvalitets Bygg-Uber Nordic plans an investment of 100 million EUR, complete decarbonization of production, transitioning to the production of so-called green steel, and transforming the Nikšić factory into a European model, following certain Swedish steel factories. Their estimate is that it would take two to three, maybe up to five years for full-capacity production, and starting the Steel Mill within three to four months is an impossible mission. The Swedish consortium plans investments of 100 million EUR, aiming to lease the Steel Mill for 15 years.

Swiss company 8B Capital S.A. believes that by reducing costs by five percent, they could increase production by 30 percent. Initially, they plan to achieve continuous production cycles in three shifts and produce 2.5 thousand finished products monthly. Production would start with 25 employed workers, and by the sixth month of leasing, this number would increase to 150, with a gradual increase in production workers.

Their condition is that if selected as the best bidder, the contract should state an additional five years beyond the announced five-year lease and the possibility for them to purchase the steel mill’s facilities if, in three to four years, they demonstrate the planned achievements.

The deadline for the final decision on choosing the best bidder is not limited, and the lessor retains the right to choose the best bidder after individual direct negotiations with the bidders from the ranking list, according to EPCG.

According to the public call for leasing, which must be for a period not less than five years, the Steel Mill will include furnaces, casting, rolling, and heating halls, while the Forge will include mechanical and construction workshops, parking space usage, vehicle servicing and maintenance workshops, as well as warehouse space.

EPCG purchased the Željezara property from the Turkish owner Tosçelik for 20 million EUR at the end of 2022. The initiation of production in the Steel Mill and Forge under the auspices of EPCG was not possible due to strict rules on state aid.”

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