Ispat Karmet, a Leader of the Steel Industry of Kazakhstan
Mr. Nawal Kishore Choudhary, General Director of Ispat Karmet answers questions from our magazine
Tell us about the major trend of activity of Ispat Karmet, the structure and stockholders of the Company.
Ispat Karmet was incorporated on 17th November 1995 to take over the assets and certain specified liabilities of erstwhile Karaganda Metallurgical Combine at Temirtau. Later on it acquired Karaganda Heat & Power Station No.2 and also the integrated property complex of Karaganda Shakthugol and 13 enterprises servicing Karaganda Coal Basin.
The company has its wholly owned subsidiaries viz. Too Orken and Too Okjetpes. Orken is engaged in mining of Iron ore at Lisakovsky, Kentube and Atasu whereas Okjetpes is supplying communal services viz. heat, power, water to the residents of Temirtau.
Ispat Karmet is having issued share capital of 6,389,300,000 Tenge divided into 63,893,000 shares of 100 Tenge each. This share capital is divided into 63,180,000 Common stock and 713,000 preferred stock both stocks having nominal value of 100 Tenge each. The 100% common stock is held by LNM Holding B.V. whereas nearly 48,500 employees hold preferred stock.
The company has paid dividend of 101.18 Tenge, 63.529Tenge and 67.06 Tenge per share for the year 2000, 2001 and 2002 respectively.
Since Ispat is one of the largest Kazakhstan investors, tell us about investment projects that have already been implemented or are nearing completion.
After arriving in Kazakhstan we have completed the construction of the first Galvanized line and commissioned it in October 1998. Thereafter we have upgraded the facilities for making cold rolled steel by installing the pickling lines and instrumentation control. In 2001, we completed the construction of 2nd Galvanized line, and in 2002 we are completing the construction of Blast Furnace No. 3 which was decommissioned sometime in early nineties.
What is the situation in markets in ferrous metals products? Who is the major consumer of Ispat Karmet’s products today? How does the company respond to changes in market situation?
I do not think, I am competent to comment on ferrous metals market. However, I can say about the steel market. As you know, the steel plant was constructed in Soviet era to meet the requirements of entire Soviet Union. After disintegration of erstwhile
Soviet union, the marketing had to be reoriented towards outside soviet markets. Today, China and Iran are the major markets. The two together takes nearly 55% products of Ispat Karmet. Unfortunately, Kazakhstan does have a very small consumption and can hardly take 5% of the production of IK. To meet with the competition in global market place we have to provide quality material at competitive prices and that too just in time. We are moving towards ISO accreditation and as first step our Galvanized shop has already secured ISO 9000 accreditation.
Are there any trade restrictions on supply of your company’s products to other countries at Present?
There has been quota fixed by the European Union for last few years and for the year 2002 it was fixed at 109,000 tons. China also, after initiating anti-dumping measures against Kazakhstan’s Cold rolled products in March 2002, fixed quota in May 2002 for Kazakhstan. This was fixed at 623,745 Tons for a period of 6 months. From 20th November the new quota has been fixed for Hot and Cold rolled steel at 164,974 Tons and 387,796 tons respectively for 6 months period.
Will Kazakhstan’s membership in WTO foster promotion of Kazakhstan steel industry Products to international markets?
Definitely, Kazakhstan’s becoming member of WTO will enhance its status in the world market. However it is unlikely to do much to boost export of Kazakh steel to international markets. It can only have some sobering effect on actions like imposition of 243% duty on Kazakhstan’s hot rolled steel by USA and 36.9% duty on Galvanized steel by Russia. The WTO will provide a forum where one can take up such issues whenever any country takes such harsh measures.
How do you estimate your prospects within the economic integration in Central Asia? Is the Company going to launch new investment projects in other regional countries, such as Uzbekistan?
Consumption of our steel products in Central Asia is very small and economic integration will augur well for the member countries but will not affect our prospects significantly. Ispat Karmet is not thinking in terms of launching any new investment project in any country of Central Asia but our parent company is definitely looking at some investment opportunities in other countries including Uzbekistan.
Please tell us about Ispat Karmet’s community contributions.
Ispat Karmet is providing financial and material help to Akimats of Temirtau and Karaganda for various activities and most important is to provide communal services viz. hot and cold water and electricity to the major part of Temirtau town at low rates. For the benefit of employees and their children various camps and recreation facilities are provided. On an average company spends about 5 million dollars on these activities.
What part does the company play in the development of the Karaganda region and the economy of Kazakhstan as a whole?
Ispat Karmet employs directly about 55,000 people and taking into account their family members and indirectly dependent people as suppliers of the material and services, it will easily touch lives of about half a million people in Kazakhstan. I am told that nearly half of the revenue of Karaganda region is contributed by Ispat Karmet. After oil exploration, the contribution of Ispat Karmet in GDP of Kazakhstan is reduced but still I think it would be little less than 4%.
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