Many people are already familiar with the process that the world economy is undergoing transformation as it enters the age of dangers and various security challenges, including global supply chains and various strategically important production capacities. (The entire material is a vg.hu(read on – ed.) Together, these highlight why it is important for a country like our country, which does not have a good portion of the natural resources necessary for the operation and operation of the steel industry, yet has a significant amount of metallurgical and industrial production infrastructure. We have to face the fact that the continued operation of the Dunai Vasmű today is both a matter of national economy and national security. From the point of view of the national economy, it is obvious that it would not be sustainable from the point of view of building the country and the day-to-day running of the country, if there was no meaningful production of raw materials for the steel industry in the territory of our country. Nevertheless, as a country directly facing the reality of war, it is also in the interest of national security in the process of military development on a historic scale, so that the Dunai Vasmű, capable of producing key raw materials for the defense industry, overcomes the various market and technological difficulties.
Technological lag
Dunaferr’s history spanning seven decades, from the forced industrialization implemented in the framework of state socialist planned management to the present day, was full of twists and turns. However, for the greater part of the story, the ironworks, known as the stronghold of Hungarian metallurgy, fought a windmill battle with technological backwardness and all its consequences. In the early 1950s, the name Sztálin Vasmű was founded, the so-called it was created towards the end of the coal era, and its most recent comprehensive and in-depth developments were carried out in the decade and a half after the oil crisis. Accordingly, the need for basic technological development has now become unavoidable in order to continue production.
Opportunities provided by debt
Of course, the fact that the company group’s production technology is outdated and in need of development by itself did not mean that huge developments would have started in Dunaújváros. However, following the EU integration that took place in recent decades, the factory should have complied with a number of environmental protection regulations and requirements to avoid the accumulation of hefty fines and other obligations. In spite of everything, the debts owed on this title began to pile up in the ironworks, to such an extent that by the time Dunaferr reached a dead end in 2022, and by the time of the state liquidation and sale, the magnitude of the liabilities could already be expressed in billions of euros. In other words, the Indian group of companies, Liberty Steel, the winner of the tender sale concluded this summer, decided to buy the ironworks in Dunaújváros, and at the same time undertook the obligation to maintain the factory’s functionality. It uses the fulfillment of its existing obligations, which are basically of environmental protection, to technology development, general and energy efficiency-increasing investments. This opens up a real opportunity to implement investments worth hundreds of billions of forints in Dunaújváros in the coming years.
The shutdown that saves the factoryWhile, knowing the facts, we can reasonably talk about the details of the grandiose industrial investments related to the ironworks, the company’s employees and the people of Dunaújváros have been concerned for weeks with the decision, according to which they practically stopped production at the factory. Thousands of workers follow the events with intense attention, and of course the locals also trust in the positive turn. At the same time, looking at the situation from a cold professional distance, it can be concluded that billions of forints can be saved by the time the sale is concluded (Liberty Steel is currently forced to wait for the approval of the European Commission), and tens of billions if the process is prolonged, by not continuing the previous, severely loss-making operation of the plant. It is easy to see that this primarily saves the jobs of more than four thousand workers working in the ironworks, since, to put it simply, instead of the new owner throwing the money out the window by compensating the operating loss, he can use it to preserve the workforce with irreplaceable knowledge and expertise. |
What’s next?
The conditions for an investment package aimed at a large-scale technological change are thus met, and the intention of the new owner of the Dunaújváros ironworks to regard the current employees as a strategic resource for which he is willing to make significant financial sacrifices can be clearly identified. However, in light of these, the question arises: how to proceed? What investments should be made in the ironworks? What will be the effects of these developments on the factory and the people living in the area? In order to be able to answer all these without knowing the inside information of the company, it is worth following the money’s path. If we know what causes the factory to operate at a deficit, it is logical to identify the directions for development.
Given that the huge debt of the liquidated and sold Dunaferr was largely accounted for by environmental fines and various unpaid quotas, the factory’s current fossil energy consumption and the consequent dramatic scale of emissions must be reduced on a large scale.
In short, coal and natural gas must be replaced with electricity in the Danube Ironworks. The solution to this is to replace the current smelters with electric furnaces, which entails a series of further transformations. Thanks to the comprehensive Greensteel technology, Dunai Vasmű can become one of the most modern plants in the sector in the coming years, as a flagship for environmental protection and sustainable economic development.
