by Symela Touchtidou
The Hellenic Republic Asset Development Fund (HRADF) has published the invitation for the expression of interest for the assets of the “General Mining and Metallurgical Société Anonyme, LARCO”. Among them the Larynos Mining Complex.
LARCO is one of the five largest ferronickel producers in the world.
In late November, the Special Administrator of LARCO has also published invitation for expression of interest for the company’s assets. The two parallel but independent tenders are called within the framework specified by the current legislation and the decision of the European Commission, of 2014.
LARCO was established in 1989. On 28.02.2020, it was placed under a special administration regime, by virtue of which Georgios Meletis was appointed as its Special Administrator. The company is crumbling under half a billion euros debt to its suppliers, banks, the Greek state and pension funds .
LARCO operates a smelting plant in Larymna, in central Greece which processes the laterites they mine to produce ferronickel with an 18%-24% nickel content. It also holds mining rights in various locations in Greece in four bundles: the Agios Ioannis mines (near Larymna), the Evia mines, the Kastoria mines and the Servia lignite mine. Some of these mining rights are leased from the State or third parties, whereas others are owned by LARCO.
The Greek government hopes there will be an investor willing to take up the challenging task of reviving the once gigantic industry. Still, government sources admit that chances are not high.
- First of all, the investor will have to turn a highly polluting industry into an environmentally conscious business. This will require a multi-million-euro investment. Energy efficiency solutions are urgently needed.
- Second, the investor will have to modernize the nickel mining and metallurgical activity of LARCO, to ensure sustainable profit. LARCO suffers from years of industrial and environmental underinvestment. It also faces harsh competition by ferronickel produced in Ukraine, North Macedonia and Kosovo.
Nevertheless, the nickel market is a promising market and prices have been picking up significantly lately. The global demand for nickel to be used in electric vehicle batteries is expected to boom in the coming years.
HRADF holds 55.2% of the share capital of LARCO, the National Bank of Greece 33,4% and the Public Power Corporation 11,4%.
The DG Competition of the European Commission has determined that LARCO has received illegal state aid in the past and has demanded the recovery of these amounts (“Recovery DG Comp Decision”). Pursuant to the Recovery DG Comp Decision, the sale of certain assets of LARCO in a transaction structure which inter alia ensures the absence of economic continuity from LARCO (“Transaction DG Comp Decision”) has been approved from a state aid perspective. The Transaction DG Comp Decision has not been implemented, yet.
In the context of implementing the Transaction DG Comp Decision, the Hellenic Republic may assign to HRADF the conduct of a tender in relation to certain mining rights and assets owned by it which are currently being leased to LARCO.