Outokumpu giving up copper - hopes to become world leader in stainless steel
The metallurgical concern Outokumpu has decided to get out of the production of copper products and concentrate on the manufacture of stainless steel.
The company’s board of directors announced on Tuesday that it hopes to attain "leadership in stainless steel".
Outokumpu has hired the investment bank Merrill Lynch to assess the options for divesting from the production of fabricated copper products. Karri Kaitue, the company’s Executive Vice President for strategy and business development, did not give a specific timetable for the copper products divestment.
"It will become clear in time if the divestment is complete or partial, and what the timetable will be. The most important message that we want to communicate to the market is that we feel that we would best serve the shareholders by concentrating on this self-evident core business: stainless steel", Kaitue said.
Refining copper is a very disperse activity in comparison with stainless steel. Outokumpu has about 7,600 employees in its copper operations in different countries. About 1,000 of them work in Finland, mainly at Pori Copper.
Outokumpu’s copper operations are worth more than one billion euros a year, but they account for only about one fifth of the company’s turnover.
Karri Kaitue noted that Outokumpu’s growth strategy since 2000 has largely focused on stainless steel, and that all significant growth has taken place in that area.
Two thirds of Outokumpu’s turnover of nearly six billion euros, and 80% of its invested capital, is in refined steel.
Outokumpu now needs cash to pay off its huge investment in the refined steel factory in Tornio. The upgrading of the Tornio plant raised the company’s debt-equity ratio to more than 100%, which it hopes to push down to 75% by the end of this year.
More than half of Outokumpu’s shares are owned by the state, either directly, or through the Social Insurance Institution (KELA). Trade and Industry Minister Mauri Pekkarinen (Centre) sees giving up copper as a natural development for Outokumpu, considering the great investment that was made in the Tornio factory.
Criticising the move, Erkki Vuorenmaa, chairman of the Metalworkers’ Union, said that Outokumpu was selling off the "national property" of Finnish taxpayers. He accused the company of seeking quick profits at a time when metal prices are high. "The great fear is that the new investments in Finnish copper production will end, and that all production will leave Finland over some period of time - perhaps in the second half of this decade", Vuorenmaa said.
He also noted that over the decades large amounts of taxpayers’ money have been spent on the development of Outokumpu’s copper production. "It is an important sector of production for all of Finland, because the electronics industry will continue to need copper. Selling it would be a heavy blow to Finnish industry", Vuorenmaa lamented.
Outokumpu press release: Outokumpu aiming for number one position in stainless steel - looking for options to divest copper products