Allur Group is about to become the new owner of AMT
Andrey Lavrentyev, the owner of Allur Auto, has become the new owner of Arcelor Mittal Temirtau (AMT). This news was revealed by Minister of Industry and Construction Kanat Sharlapayev during a press briefing.
The minister said that the deal has already been closed. Indian mogul Lakshmi Mittal handed over its share in the company to the government of Kazakhstan. Then, Lavrentyev, a Kazakhstani businessman bought it from the state. Some media outlets reported that AMT will be renamed QARMET. Rumors about the deal began to circulate two weeks ago but the press service of Allur Auto declined to confirm that at the time.
The deal was signed on December 7, even though it was expected to happen on November 30. According to the minister, negotiations over the deal were tough and complicated. The cost of AMT and ArcelorMittal Aktau was estimated at $286 million combined. The new investor has also agreed to pay off $250 million in short-term debt to the parent company ArcelorMittal and $450 million in long-term debt within four years. In other words, the investor will pay $986 million for the assets. Not a dime was spent from the state budget, according to Sharlapayev.
In addition, AMT agreed to drop any possible claims to Kazakhstan. The parent company ArcelorMittal even said that it will donate $34.9 million to the Kazakhstan Halkyna charity fund to implement a set of social projects in the Karaganda region and the town of Temirtau.
As the minister of industry noted, the negotiation process consisted of 11 rounds and was initiated by the government after an accident last year that took the lives of five workers. In December 2022, the country’s authorities and ArcelorMittal signed a Standstill Agreement that allowed the Kazakhstani side to audit and evaluate the company. The government also revealed that ArcelorMittal wanted to get $3.5 billion for its assets in Kazakhstan which contradicted financial estimates by international consultants.
«This was one of the reasons why this negotiation process took so long. We wanted to buy the entity for a fair price without any cost- and time-consuming legal proceedings in international courts. On the other hand, we were in a rush because we didn’t want the plant to stop its operation,» Sharlapayev said.
The minister described the deal between the government of Kazakhstan and ArcelorMittal as a «mega deal» because it has «exclusive meaning for the entire country.» Sharlapayev also highlighted that Kazakhstan has effectively avoided many risks that affected many other governments worldwide.
«ArcelorMittal has no claims to the government of Kazakhstan. The agreement was reached within the legal environment and fully meets international legal requirements,» Sharlapayev said.
Lavrentyev is the chair of the board of directors and a stakeholder of Allur Auto which controls Agromashholding and SaryarkaAvtoProm, the two companies in the automotive industry. Allur is the official producer, distributor and partner of brands such as Chevrolet, Kia, JAC and LADA in Kazakhstan. The businessman is also a co-founder of Business FM radio station, the president of the triathlon federation of the Kostanay region and a participant in projects like Mother’s House, YPO Kazakhstan and IQanat.
Earlier this year, Sharlayev said that Kazakhstan would gain control over all ArcelorMittal assets within the country, including ArcelorMittal Aktau. This company owns a pipeline plant and a range of subsidiary divisions. At the time, he promised that the deal would be reached by the end of November as all necessary documents must have been ready by that time.
First Vice Prime Minister Roman Sklyar also highlighted earlier this year that a new investor of AMT will be a Kazakhstani businessman with no links with Russian President Vladimir Putin or any Russian moguls. He said that the investor would buy the asset for a fair market price. Sklyar also confirmed that the new investor attended a meeting with President Kassym-Jomart Tokayev and Kazakhstani businessmen in September.
Once the purchase is closed, the investor will be obliged to invest more than $1 billion in the asset within the next year and $3 billion within 3 to 5 years. He must also follow the investment schedule designed to improve the plant’s safety and expand its product assortment. (Currently, AMT produces just two types of products.)
On October 28, the Kostenko coal mine controlled by AMT reported an accident that caused the death of 46 miners. President Tokayev demanded the cabinet stop investment cooperation with AMT and called this company «the worst in the country’s history» in terms of cooperation with the government. He also declared a national mourning the next day.
In turn, the company said that the preliminary agreement on transferring assets with Kazakhstan’s government was signed after months of negotiations a week before the tragedy. Prime Minister Alikhan Smailov said that the country’s authorities were eager to close the deal as soon as possible.
In August 2023, when the Kazakhstanskaya mine (controlled by AMT) reported the death of five miners, the government announced that it wanted ArcelorMittal to leave the country and negotiations with the investor were already underway. The cabinet said that «a political decision was made.» At the time, Sklyar said that the cabinet was also trying to find «new investors that would be able to support the effective operation of the plant and invest money into its further development.»
However, a month after the August accident, the government denied its words about «the political decision» on AMT leaving Kazakhstan. Officials started to say that a change of investors wasn’t a mandatory term if AMT wanted to continue to operate in Kazakhstan. The only intention of the government was to make the company pay more attention to safety at the plant.
Similar negotiations happened many times before. In 2021, AMT management already promised to improve labor and production safety and invest in the plant’s modernization. The company even signed a memorandum of understanding with the government of Kazakhstan and promised to invest at least $3 billion within ten years. However, ArcelorMittal has never fulfilled those obligations to their full extent.
In February 2023, Nygmedzhan Makazhanov, a former chair of the Industrial Safety Committee under the Ministry of Emergency Situations, said that in 2022, the agency identified around 2,000 violations of safety rules at AMT. He also said that the committee was keeping an eye on the plant. Over the years of AMT operation, more than 100 miners have died in different mines controlled by the company.
