8B Capital remains sole bidder for Montenegro's EPCG Zeljezara lease

Last month, local media reported that apart from 8B Capital, a consortium made up of local company Neksan, China’s Universal Energy and Czech Energy & Industrial Management Advisory Services, as well as Swedish consortium Kvalitetsbygg Gruppen and Uber Nordic also submitted bids in the tender.

During the negotiations, the offers of the Neksan-led consortium and of Uber Nordic were rejected as unacceptable, EPCG's deputy financial director, Miro Vracar, said in a video published by local broadcaster RTCG on Tuesday.

Vracar noted that the offer of the Neksan-led consortium was conditioned on receiving an authorisation from EPCG for the construction of 140 MW of renewable energy sources, including 90 MW of solar power and 50 MW of wind power. Uber Nordic's bid was conditioned on receiving state guarantees in the amount of 100 million euro ($109 million).

8B Capital offered to restart production at EPCG Zeljezara in three work shifts in the beginning, producing 2,500 pieces of finished goods per month, Vracar said. It also pledged to hire 25 workers at the start and raise their number to 150 within six months.

Vracar also noted that the representative of 8B Capital - Russian businessman Igor Shamis, had participated in the management of former steel mill Zeljezara Niksic (now EPCG Zeljezara) back in the early 2000s when the Montenegrin company was controlled by Canadian-Russian investment firm Midland Group.

"We are still examining the bid," Vracar said.

Local media reported last month that 8B Capital had proposed to increase production by 30% by reducing costs and gradually increasing the workforce. Additionally, the investor had requested an option to extend the lease for five more years if it meets its targets within the first three to four years, along with the possibility of purchasing the steel mill's facilities.

According to the media reports, the Neksan-led consortium had proposed a monthly lease fee of just over 30,000 euro for a period of 35 years. They planned to invest 40 million euro within five years, with potential for additional investments. Moreover, they aimed to produce green steel and electricity.

Kvalitetsbygg Gruppen and Uber Nordic had offered to invest an overall 100 million euro and to achieve complete decarbonisation of production processes and transition to production of green steel. The Swedish consortium intended to lease the factory for 15 years, according to the media reports.

EPCG launched the public call to investors for the lease of the steel mill's capacities in December, aiming to preserve steel production at the troubled plant. Under the tender terms, the interested investor will be able to sign a five-year lease contract, with an extension option. The minimum monthly fee was set at 30,000 euro.

EPCG acquired Zeljezara Niksic from Turkey's Toscelik for 20 million euro in December 2022.

Located in the western city of Niksic, EPCG Zeljezara has two 60-tonne electric arc furnaces that can produce an estimated 300,000 metric tonnes of crude steel per year.

($ = 0.916 euro)