Belonging to the announced delisting from LSE, which belonged to the UMMC Iskandar Makhmudov and partners, the Chelyabinsk Zinc Plant (CZP) announced the sale of the British Brock Metal Company (BMC), which provided the plant with about 20% of the proceeds. The English asset does not depend on CZP supplies and brought little dividends, the source of Kommersant explains. Analysts estimate the deal at £ 15-20 million, recalling the anti-Russian campaign in Britain, but see the transaction as a "simple economy" against the backdrop of high zinc prices.
CZP closed the deal on the sale of BMC Luxembourg NFM Group on May 31, the company said, without disclosing details. The general director of CZP, Pavel Izbrecht, said that the deal would allow the plant to concentrate on developing the raw materials base and modernizing the main production, and taking into account the price of zinc for LME, it is "attractive and cost-effective for CZP." Co-owner and managing director of NFM Claude Bever noted that the transaction will increase the group's profit from its core business of producing niche zinc alloys. The capacity of NFM will almost double, to 105 thousand tons per year.
In 2007, CZP bought BMC for £ 8 million. BMC is located in Staffordshire, produces zinc alloys for casting, capacity is 45,000 tons per year, sales go to England and Europe. In 2017, the output of alloys amounted to 41.46 thousand tons, financial performance was not yet disclosed, revenue in 2016 was £ 68 million, net profit - £ 1.47 million, debt - £ 2.4 million. NFM-CRAMET's capacities in the Belgian Kreischaute - 60 thousand tons of alloys a year, the output in 2017 - 55 thousand tons, the financial performance of the group is not disclosed.
CZP is included in UMMC Iskandar Mahmudov, Andrei Bokarev, Andrei Kozitsyn and partners, NFM belongs to managers. Russian companies did not answer the questions of Kommersant yesterday.
Claude Bever told Kommersant that he was not ready to comment on the majority of issues (including zinc purchases from CZP), but noted that NFM does not have business with Russia, and most of the sales go to Western Europe.
The contribution of the British company to the consolidated revenue of CZP in recent years was about 20%. "At the same time, the dividends from BMC were minimal (at £ 400-500 thousand in 2013-2016, according to the company." Kommersant "), and the issue of selling the asset was on the table for far more than a year," says a source ", Familiar with the situation. According to him, the British asset does not depend on the supply of metal from Chelyabinsk. Now UMMC, which in November 2016 consolidated 95.57% of CZP shares, completes the company's delisting from the London and Moscow stock exchanges.
Maxim Khudalov, the director of the corporate ratings group of ACRA, does not rule out that the owners of UMMC could have thought about selling BMC against the backdrop of claims to Russian capital in the UK, but believes that the transaction is based on a simple economy. "And in the period of low prices, and even more so during the recovered period, the main margin lies in the extraction and smelting of metal, and the BMC, which buys refined zinc at market prices, earns a little on redistribution," the analyst says. At the same time, in his opinion, the asset for sale could be estimated at 7-8 EBITDA, or £ 15-20 million.
According to the forecasts of International Lead and Zinc Study Group, demand for zinc in 2018 will grow by 2%, for the first time in four years, and will amount to 13.97 million tonnes, while the market will continue to have a deficit of 263 thousand tons (in 2017 - 495 thousand tons). The main producer of zinc (45% of the world's total) and the main consumer (50%) are China, followed by Europe (17%). Zinc prices from the beginning of 2012 kept in the range of $ 2-2,5 thousand per ton, at the end of 2015 they dropped to $ 1,5 thousand, but from the spring of 2016 they began to grow on the fears of a deficit and in February 2018 they reached $ 3 , 6 thousand per ton (LME). Now a ton of zinc costs about $ 3.17 thousand, and, according to Maxim Khudalov, in the long term, the price will drop to $ 2.7-2.8 thousand, because a long period of low prices has frozen not only many greenfield projects, but also production on deposits with poor ores, the development of which in recent years is again profitable.