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Stalemate at the steelworks in Liepāja

Take note – story published 2 years and 1 month ago

Last spring, an investor from Turkey bought one of the largest assets ​​of the former Liepājas metalurgs plant for several million euros – an electric steel smelting furnace, in which scrap metal can be melted. 

The purpose of the purchase was to restore the operation of this furnace in Liepāja. However, the investor company has failed to obtain a long-term land lease agreement so that it can be sure that it will be able to operate. Consequently, hopes that steel smelting might restart in Liepāja have yet to be realised, reported LTV's "Aizliegtais paņēmiens" (Forbidden method) April 25. 

The Liepājas Metalurgs steelworks was formerly a major employer in Latvia's third-largest city. It closed its doors in 2013 and subsequent attempts to revive operations at the huge sight have foundered. History seems to be repeating itself again, according to Aizliegtais paņēmiens' report.

On April 30, 2021, as a result of an auction, the furnace was purchased by the Turkish company Aslanli Metalurji with a subsidiary in Latvia - Liepāja Steel.

Until now, although he has often visited here, investor Hamadi Alaedin Ejuboglu, Chairman of the Board of Epas Group, has not spoken to the Latvian media, but "Forbidden Method" managed to get to know him in person at the beginning of April this year.

He told the show: "I have practically grown up in the iron and steel industry, as our family has been in the business for three generations. I do a job I love very much. I have learned all about this from my father. (..) Our children are already in the fourth generation and are also learning the skills of this business."

Hamadi Alaedin Ejuboglu explained: "We have a team that monitors all developments in the world related to the steel industry. They learned that the [Liepāja] metallurgical company was closed down in 2016 [from the previous owners]. And later a tender was announced for the purchase of an electric furnace. We prepared and submitted an offer. (..) It must be said that we, as a foreign investor in a foreign country, still had some doubts about our participation in the tender.

The buyer of the furnace itself, Aslanli Metalurji, is part of a multi-sector group called the Epas Group. Its core business is in Turkey itself, but there is also a steel smelting furnace in the Georgian port city of Poti.

According to the investor, the total investment plans over five years are as much as 200 million euros.

"Initially, the planned number of employees could be around 400, which would certainly increase over time with the development of technology and the construction of a new rolling mill. It is still difficult to talk about investments in general, as they are usually based on projects and inflation. There are a lot of raw materials available that could be used in our factory. Because a total of 1.2 million tons of scrap metal is exported from Latvia and Lithuania every year," explained the chairman.

However, that is all on hold as the plans have hit problems, he said.

"We need a long-term contract to stay and work here. We also need work permits here. We have not received a response to our request so far. We want to work here and can guarantee that our work will be environmentally friendly, if there are doubts about that. We will feel that we are more supported in Rīga than in Liepāja. It makes us sad as an investor. We are ready to come in with our investments and work here," Hamadi Alaedin Ejuboglu said.

The Turkish entrepreneur's plans to operate the stove are currently met with a degree of skepticism in Liepāja itself, according to Forbidden Method. Namely, immediately after the auction, the main officials of Liepāja were worried about who the buyers were.

At the time, Uldis Sesks, Chairman of the Board of Liepāja Special Economic Zone, told Kurzeme TV: "We have no business plan or investment plan at our disposal. As of today, there is practically nothing. If the government has more information, please don't keep it secret, show us what this company really is."

The current chairman of Liepāja City Council Jānis Vilnītis pointed out: "It seems from Rīga that we need this company in Liepāja."

About two months after the purchase, on July 5, the Liepāja SEZ exercised its pre-emptive right under the law and bought the 30 hectares of land under the furnace owned by the Turkish company for three million euros.

On the one hand, it sounds like an underhand move, but on the other hand - the management of Liepāja SEZ pointed out that the purchase of land was not against the investor, but there are were already plans for developing the whole territory of "Liepājas metalurgs" since 2018.

The main idea is a modern industrial park, an area cleared of pollution from previous years, accessible to both entrepreneurs and people, without any fences. A study of the territory has been carried out and its local planning has been developed. It is also planned to attract European money to the regeneration project.

Since then, the Turkish investor and the Lipāja SEZ have failed to reach agreement on the terms of a lease for the land under and around the furnace, without which it cannot operate. There are also concerns about whether the reactivated smelter could meet stringent environmental pollution standards. The company insists it will meet all necessary standards provided it can obtain the long-term agreements necessary to justify its future investments.

For now, the situation appears to remain in a stalemate. 

The Turkish businessman still hopes that his plans will come to fruition in Latvia, namely that there will be both metal smelting and a new rolling mill.

If not, the company's chairman said: "Of course we have a plan B. We would be forced to dismantle this equipment and move it to either a Turkish or Georgian plant. This will undoubtedly come at an additional cost, but staying here and allowing us to work would strengthen the relationship between Turkey and Latvia."

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