The global giant on Oct. 15 bought the remaining shares owned by the former Polskie Huty Stali government group, giving it 100 percent control of Poland’s largest steelworks in Krakow, Czestochowa, Katowice and Sosnowiec. The consortium, founded in 1976 in Calcutta, India, by Lakshmi Mittal, has owned the majority of the Nowa Huta group since 2003, when an agreement on the sale of the government-owned PHS shares was reached with the Polish Treasury Ministry.
At that time, Mittal bought the majority of Nowa Huta shares for 6 mln zloty (1.6 mln euro) and also agreed to cover 1.6 bln zloty in debts of the four steelworks and to invest another 2 bln zloty in their development.
An agreement on the takeover of the remaining state-owned shares in the PHS was reached in 2004. However, the price (1 zloty or 3.6 euro per share) was questioned by the Supreme Chamber of Control (NIK), an audit body controlling all state institutions. The NIK decision was proved right.
Now Mittal has agreed to pay 6.5 zloty per share to become the sole owner of the group. The government sold its remaining shares for 436 mln zloty.
According to the daily newspaper Gazeta Wyborcza, the Polish Treasury will earn 2 bln zloty on this year’s privatization deals, 1 bln less than planned. In 2005, the first year of the government led by the Law and Justice Party (PiS), the Treasury earned only 600 mln zloty.
Takeovers of public sector industries by private companies have been one of the most important changes in the Polish economy since communism collapsed in 1989. The most impressive year was 2000 when the state recorded 27.1 bln zloty from privatization.
Nowa Huta steelworks was one of the most important enterprises in Communist Poland after World War II.
An entire district of Krakow, initially a separate city with 200,000 inhabitants, was built to meet the housing needs of Nowa
At its peak, the steelworks named after Soviet Communist leader Lenin employed 40,000 people and produced 7 mln tons of steel a year.
As the steel industry slumped in the 80s, both numbers went down. Now the steelworks has no more than 10,000 workers, and this is expected to continue decreasing.