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Czech PM, Liberty quell fears over Ostrava steel mill CO2 certificates status

Highlights

Czech PM discusses works issues with Ostrava

Liberty says CO2 certificates remain for Ostrava's benefit

Unions maintain strike threat

Prague and London — Czech Republic Prime Minister Andrej Babis intervened April 16 amid growing concerns over the future of the country's biggest steelmaker, Liberty Steel Ostrava, following the collapse of a major financier to its parent companies Liberty Steel Group and GFG Alliance.

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Babis said on his Twitter account that he was involved in an online discussion with local management during a visit to Ostrava.

"We resolved problems with the management of steel company Liberty Ostrava, whose recent moves have made me and [industry minister] Karel Havlicek very nervous," Babis said. "We clearly told the management that the financial property and assets should remain in the Czech Republic."

Havlicek said on his Twitter account that "in today's talks with management and unions we obtained a guarantee that gave assurances that company assets will not be transferred out of the Czech Republic."

Carbon emissions allowances

Unions at the Ostrava mill issued a strike warning April 13 over the impact of the parent companies' financial problems on the Czech steel mill. In particular, unions said they were worried that the parent companies would seek to loan carbon emissions allowances worth around Eur200 million ($238 million) to Romania's Galati Steel, also a member of the Liberty Group, so that it can resume operations. The unions said that revenues from the allowances have been earmarked for modernization of the Ostrava mill, as promised by Liberty Group when it took over the Ostrava plant in 2019.

"In common with other large industrial companies, LIBERTY Steel Group businesses trade carbon credits as part of the usual course of business," a GFG spokesperson said April 16 in a statement. LIBERTY Ostrava was pleased to welcome Prime Minister Babiš and his team to the steelworks this morning and were pleased that they reiterated their support for the plant's transformational projects. We also confirmed that the plant's CO2 certificates will continue to be used for the benefit of LIBERTY Ostrava."

Broadcaster Czech Television cited Babis as saying there were no grounds for transactions over carbon allowances or other assets to take place when Ostrava Liberty's financial results are not consolidated at a group level.

The main union at the steelworks, OS KOVO, said on its web pages that it regarded the promise that carbon allowances would not be transferred as "an important step." The strike threat will nonetheless be maintained until the promise is confirmed, it added.

Liberty Steel Ostrava has an annual production capacity of 3.6 million mt and employs around 6,000 people.