Romania’s advantages and disadvantages for Voestalpine investment

’s advantages are the major capacity of Constanta Harbor, the Danube-Black Sea channel allowing for rapid transportation, water needed for raw material processing, inexpensive and qualified labor force, inverse taxation for VAT paid for raw materials at customs, and facilities for road and railroad infrastructure. Its weak points are high land prices and a ban imposed by the European Union on state aid. , ’s main rival in terms of this investment, is allowed to grant state aid, as it is not a member of the European Union, according to a General Manager of the Ministry of Economy and Finance, Petru Ianc.

“Some 50 percent of the future steel plant production will be exported to , so the maritime infrastructure is very important for the Austrian group. is in the best position in this chapter because of the Danube-Black Sea channel,” said Ianc.

According to government sources, Voestalpine has redrawn its investment project to fit the 600 hectares available for sale in , close to the southern Romanian Lazu village, in Constanta County (not far from the Black Sea). The company already contracted a 96.4 ha plot in the area.

By the end of the year, the company is to announce a final decision on the location of the future steel plant, perhaps as early as August or September. A memorandum between the Romanian government and Voestalpine is to be signed in the coming weeks. Sources said that the signing will take place on 31 July. A memorandum with has also been signed already, while a similar document will be signed with , according to Voestalpine representatives. As far as is concerned, a feasibility study is ongoing.

Voestalpine’s Head of Corporate Communication, Peter Schiefer, told Business Standard that the investment will be made with the steel producer’s own funds. “The company has an annual cash flow worth €1.5 billion. The €5.5 bln investment will be made gradually and annual amounts to be spent for the steel plant construction can be supported without difficulties by the company, and with no need for a loan," he said. A loan will be considered only if large unscheduled investments are required, Schiefer added.