Ukraine's Vorskla Steel to Develop $920 Million Mill in Hungary

Ukraine-based steel manufacturing company Vorskla Steel AG (Kiev, Ukraine) plans to develop a steel mill with an investment of $920 million (?650 million). The mill will be located in an upcoming industrial and logistics park in Zahony, Hungary, near the Ukrainian border. According to reports from Industrial Info Resources (Sugar Land, TX), the project is expected to generate about 1,000 employment opportunities. With the proposed steelworks venture, Vorskla would be the first investor to establish operations at the industrial park.

The industrial and logistics park will be developed over an area of 170 hectares in the Zahony region, near Komoro and Fenyeslitke, in the administrative county of Szabolcs-Szatmár-Bereg in northeastern Hungary. The county shares borders with Romania, Slovakia and Ukraine. Development of the park will entail an estimated investment of $18.5 million. The European Union recently pledged about $9.5 million in financial aid for the industrial park.

The industrial and logistics park is being developed as part of $170 million worth of developments planned in the Zahony region, which has railway connections to Russia and Ukraine. Infrastructure developments are being implemented in 16 settlements in the region, with the aim of evolving it as one of the largest and most sophisticated railway and logistics junctions along the eastern external border of the EU by summer 2012. The overall circulation of commodities between Zahony and Ukraine will increase from the current volume of 5.3 million tons per year to 8.5 million tons per year. The EU already has co-funded investments of more than $135 million toward this venture.

In April 2006, Vorskla entered into a memorandum of understanding with the then Hungarian Ministry of Economy and Transport, now known as the Ministry for National Development and Economy, to develop a steel plant in Zahony. The cost of the project was estimated at $425 million. Construction works were scheduled to start later that year, and the plant was expected to commence production in 2009. According to reports in July 2007, construction of the plant was rescheduled to start in the first half of 2008, with production set to commence in 2010-11.

In December 2008, Vorskla announced plans to begin construction of the steel mill in Fenyeslitke by the first half of 2009. Reports at that time indicated that the steel plant would be constructed in a period of 30 months. The firm's plans involve the development of a steel mill with an initial capacity of 2.5 million to 3 million tons per year of hot-rolled products, with plans for subsequent capacity expansion to produce 5 million tons per year of hot-rolled steel and 1 million tons per year of cold-rolled steel.

Vorskla Steel is owned by business tycoon Kostyantin Zhevago, Ukraine's youngest billionaire, who was ranked 891 among the world's billionaires by Forbes magazine in 2007. At the age of 33, Zhevago also was named the youngest self-made multimillionaire in Europe. Zhevago is also credited with being the first in Ukraine and Russia to present one of his companies, Ferrexpo plc (London, England) to the London Stock Exchange.