Liberty Galati: How EU Policies Are Saving Romania's Steel Giant from Insolvency

Liberty Galati, the only fully integrated steel manufacturer in the area, aims to restore complete operations with an output of 2 million tons annually, which represents roughly two-thirds of its stated capacity as outlined in the pre-insolvency filing endorsed by the court earlier this month. The updated plans from the European Union concerning defense and energy policies could potentially aid its survival.

Liberty Galati needs to develop a recovery strategy within two months, as indicated by a pre-insolvency document reviewed by Profit.ro. This plan should aim for production levels exceeding 172,000 tons each month. Timing could be advantageous for the firm due to potential EU measures aimed at enhancing defense industry capabilities, curbing inexpensive steel imports, and establishing more attainable carbon reduction goals—all initiatives that might support Liberty Galati’s efforts to bounce back during this critical period.

The preliminary insolvency process enables the firm to utilize the RON 750 million loan provided by Exim Banka Românească exclusively for operational funding.

In addition, Liberty Steel was offered RON 350 million worth of contracts from firms in the defense sector; however, this is contingent upon how swiftly these companies can formulate their production plans.

The Romanian steel manufacturer will similarly gain advantages from the extension of the favorable policy granted to energy-consuming businesses regarding the acquisition of "green certificates." For the last decade, these energy-intensive firms were permitted to buy reduced quantities of green certificates—a method used to support wind and solar initiatives—under a program scheduled to conclude at the end of this year.

Nevertheless, the elevated energy costs in Romania relative to many other European nations pose a significant challenge for businesses based in Romania, such as Liberty Steel.

Ultimately, the European Union's decision to restrict the imports of cheap steel might assist Liberty Steel in achieving profitability.

The European Union plans to impose stricter steel import quotas, aiming to decrease imports by an additional 15% starting from April. This announcement was made last week by Stefan Sejourne, the Executive Vice President of the European Commission, according to reports. G4media.ro The ruling aims to stop the European market from being overwhelmed by inexpensive steel, subsequent to the 25% tariffs on steel and aluminum imports declared by President Donald Trump.

iulian@romania-insider.com

(Photo source: Liberty Galati)