Creditors of South Korea’s Dongbu Steel Company may face a setback in their plan to sell off the cash-strapped company’s electric furnace used for hot-rolled steel production to an Iranian steelmaker, amid concerns that the US could walk out of a nuclear deal with the Middle Eastern country.
According to a report by South Korean business news agency Pulse, creditors had planned to sign a final agreement with the Iranian steelmaker that was selected as a preferred bidder in September but the main creditor KDB has been putting off the plan.
If further delayed, the deal could fall through and make the creditors renew the auction process. Such a scenario would upset the subsequent plan to sell Dongbu Steel’s Incheon plant.
According to multiple sources from the steel industry on Monday, KDB will soon announce the result of negotiations involving the sale of Dongbu Steel’s electric furnace used for hot-rolled steel production at its Dangjin plan in western Korea.
An unnamed official familiar with the matter said the result would take account of not only economy-related issues, but also political factors.
According to Dongbu Steel, the Iranian steelmaker was selected as the preferred bidder over others, as it proposed the highest purchasing price of 120 billion won ($106.2 million).
However, some creditors are anxious about selling a core steel production facility to an entity based in Iran with uncertainties over the nuclear deal that could affect the easing of international sanctions.
An unnamed official from Dongbu Steel said that once the final agreement is signed, the Iranian steelmaker would take home the entire electric furnace from the Dangjin plant.
The official added that creditors are carefully reviewing whether an electric furnace facility would be included in a list of banned strategic materials exported to Iran.
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