Business News

SIJ Planning Streamlining, Significant Investments (interview)

Ljubljana, 16 May (STA) - Slovenia's biggest steel company, SIJ, is in good shape and has a lot of potential. There is scope for cost cutting, but this will be coupled with significant investments, Anton Chernykh, who took over as chief executive of the Russian-owned company at the beginning of the year, told the STA.

"In the first three months we looked over the production and financial capabilities and found we have significant reserves. Based on the overview, and the company's financial and technological standing, we've prepared plans for 2014-2020," he said.

Chernykh said the greatest scope for savings was in cost effectiveness. The company plans to cut material costs by 10-15% and labour costs even more, while streamlining energy procurement.

At the same time, investments of about 250 million euros are planned across the group. "We're close to the final version, but we are still working out the details with the management," he said.

A EUR 100m investment is planned in Metal Ravne, a specialist in tools and high-speed steels, and significant investments in Noži Ravne, a maker of industrial blades.

However, the investments also hinge on the situation in the economic environment, which Chernykh has mixed feelings about.

"On the one hand the environment is good, which is also clear from our investments...But I also have complaints about tax policy, bureaucracy and the energy sector," he said.

Chernykh singled out the case of Metal Ravne, which has spent the last seven years trying to secure a new power line to the production site and a stronger substation.

"It is only three kilometres, but that would solve all the problems of this location. The project is worth EUR 8m, SIJ is willing to contribute EUR 2m, but we have not received backing from the state," he said.

"We've had a lot of meetings and will meet the power grid operator in the future...But if this issue is not resolved, it will be very difficult to complete [the investment]," he said.

SIJ is in majority ownership of KOKS, a big Russian industrial group, and is the biggest single Russian foreign investment in Slovenia. Chernykh said the owner's wish is "definitely to stay in Slovenia in the long term."

The group was sold to the Russian industrial group Koks in 2007 for EUR 105m in what was one of the biggest cases of privatisation in years.

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