PRESS RELEASE
Joint Stock Company “Uzbek Metallurgical Plant” (RSE: UZMK) (hereinafter – Uzmetkombinat JSC, the “Company”), a leading producer of ferrous metallurgy products in Uzbekistan, in light of the adoption of the Decree of the President of the Republic of Uzbekistan No. 85 “On further measures to accelerate market reforms and harmonization of national legislation of the Republic of Uzbekistan with the agreements of the World Trade Organization” announces the following.
Over a long period Uzmetkombinat JSC has been the monopoly operator of the process of collection and procurement of ferrous metal scrap on the territory of the Republic of Uzbekistan. Within the company, there are 14 branches for scrap collection in all regions of the country, consisting of 38 sites where more than 1,000 people, regularly carry out collection, processing and delivery of scrap, waste ferrous metals. The material base of the network allows to receiving, performing laboratory control, sort, procure and load ferrous scrap of any volume onto transport and delivering it to the production facilities of “Uzmetkombinat” JSC in Bekabad. The points are equipped with all necessary equipment, machines, and mechanisms. The annual volume of scrap is about 700 thousand tons.
Importantly, of the total volume of scrap harvested, no more than one third was purchased at the monopoly price set by the state, while the remaining volume was purchased from private suppliers at market prices. This approach is due to the need to stimulate the activity of private procurement groups supplying scrap to collection points. The share of scrap purchased at monopoly prices has decreased by half since 2022.
According to the expert estimation by the company's specialists, the total annual volume of scrap procurement in the territory of the Republic of Uzbekistan is about 1.2-1.4 million tons. The difference between these figures indicates the existence of an unofficial scrap market where the deals are made in cash or semi-official form. The monopoly status of ferrous metal scrap collection by Uzmetkombinat JSC was not observed due to the existence of unofficial schemes of scrap collection and realization in the country.
According to the published document, from January 1, 2025, a licensing procedure for the procurement (acquisition), processing, and sale of ferrous metal scrap and waste will be introduced. The introduction of license requirements for the collection and harvesting of ferrous metal scrap will allow the government to improve the quality and level of control over compliance with procedures, occupational health, and safety at enterprises in the sector, increase the official turnover of such enterprises and create a level playing field in the market. Improved transparency of work in the sector will allow for better opportunities in scrap collection and expand the raw material base of the Company.
In this case, the Ministry of Mining Industry and Geology together with the Ministry of Energy, the Ministry of Economy and Finance, and other interested government authorities have been instructed to develop and submit to the Cabinet of Ministers by September 1, 2024 draft version of regulations for the preparation (purchase), processing and sale of scrap and waste of ferrous and non-ferrous metals.
Uzmetkombinat JSC definitely supports and welcomes the measures implemented by the President and the Government to establish transparent market relations in the industry, reduce the share of shadow economy, re-consider requirements to labor safety and protection of labor legislation. Uzmetkombinat JSC is deliberate to take advantage in this situation as the availability of an extensive and well-equipped scrap procurement network, compliance with safety standards, which for other enterprises will have to adjust and implement, as well as the presence of a significant volume of demand from Uzmetkombinat JSC, which allows to ensure regular, virtually unlimited purchase of scrap from private suppliers with guaranteed payment terms.
Note:
JSC Uzmetkombinat (JSC UZMK) is the leader of ferrous metallurgy in Uzbekistan, counting its history from 1944. Its manufacturing plant has an installed annual capacity of more than 1 million tons of rolled products and is implementing a large-scale investment program to increase capacity to 2.5 million tons per year during 2021-2025. The enterprise employs more than 11,000 people. Its products are sold in all regions of the country and are exported to various countries of the world, including Europe. More than 90% of the Company's shares are owned by the Uzbekistan state. A significant portion of the Company’s shares is traded on RSE "Toshkent". Common and preferred shares of the Company have the status of highly liquid.
Disclaimer
This release contains forward-looking statements that reflect the current views of JSC Uzmetkombinat management regarding future events. They are generally denoted by the words "expect", "anticipate", "intend", "estimate", "aspire", "plan", "will", "forecast" and comparable expressions, and usually contain information that refers to expectations or goals regarding economic conditions, sales revenue, or other criteria for the success of an enterprise. Forward-looking statements are based on current plans, estimates, and expectations within the current legal and regulatory environment and are therefore only valid as of the date indicated. Therefore, such statements should be considered with caution. Such statements are subject to numerous risks and uncertainties (such as those described in publications), most of which are difficult to estimate and are generally beyond the control of JSC Uzmetkombinat. Relevant factors include the consequences of prudent strategic and operational initiatives, including the acquisition or disposal of companies (interests in them) or other assets. If certain risks and uncertainties arise, or if the assumptions on which the statements are based prove incorrect, the actual results of JSC Uzmetkombinat may differ materially from those expressed or implied in these statements. Uzmetkombinat JSC cannot give any guarantee that expectations or goals will be achieved. Uzmetkombinat JSC, despite existing legal obligations, disclaims any responsibility for updating forward-looking statements to reflect new information or future events or other conditions or circumstances.
Over a long period Uzmetkombinat JSC has been the monopoly operator of the process of collection and procurement of ferrous metal scrap on the territory of the Republic of Uzbekistan. Within the company, there are 14 branches for scrap collection in all regions of the country, consisting of 38 sites where more than 1,000 people, regularly carry out collection, processing and delivery of scrap, waste ferrous metals. The material base of the network allows to receiving, performing laboratory control, sort, procure and load ferrous scrap of any volume onto transport and delivering it to the production facilities of “Uzmetkombinat” JSC in Bekabad. The points are equipped with all necessary equipment, machines, and mechanisms. The annual volume of scrap is about 700 thousand tons.
Importantly, of the total volume of scrap harvested, no more than one third was purchased at the monopoly price set by the state, while the remaining volume was purchased from private suppliers at market prices. This approach is due to the need to stimulate the activity of private procurement groups supplying scrap to collection points. The share of scrap purchased at monopoly prices has decreased by half since 2022.
According to the expert estimation by the company's specialists, the total annual volume of scrap procurement in the territory of the Republic of Uzbekistan is about 1.2-1.4 million tons. The difference between these figures indicates the existence of an unofficial scrap market where the deals are made in cash or semi-official form. The monopoly status of ferrous metal scrap collection by Uzmetkombinat JSC was not observed due to the existence of unofficial schemes of scrap collection and realization in the country.
According to the published document, from January 1, 2025, a licensing procedure for the procurement (acquisition), processing, and sale of ferrous metal scrap and waste will be introduced. The introduction of license requirements for the collection and harvesting of ferrous metal scrap will allow the government to improve the quality and level of control over compliance with procedures, occupational health, and safety at enterprises in the sector, increase the official turnover of such enterprises and create a level playing field in the market. Improved transparency of work in the sector will allow for better opportunities in scrap collection and expand the raw material base of the Company.
In this case, the Ministry of Mining Industry and Geology together with the Ministry of Energy, the Ministry of Economy and Finance, and other interested government authorities have been instructed to develop and submit to the Cabinet of Ministers by September 1, 2024 draft version of regulations for the preparation (purchase), processing and sale of scrap and waste of ferrous and non-ferrous metals.
Uzmetkombinat JSC definitely supports and welcomes the measures implemented by the President and the Government to establish transparent market relations in the industry, reduce the share of shadow economy, re-consider requirements to labor safety and protection of labor legislation. Uzmetkombinat JSC is deliberate to take advantage in this situation as the availability of an extensive and well-equipped scrap procurement network, compliance with safety standards, which for other enterprises will have to adjust and implement, as well as the presence of a significant volume of demand from Uzmetkombinat JSC, which allows to ensure regular, virtually unlimited purchase of scrap from private suppliers with guaranteed payment terms.
Note:
JSC Uzmetkombinat (JSC UZMK) is the leader of ferrous metallurgy in Uzbekistan, counting its history from 1944. Its manufacturing plant has an installed annual capacity of more than 1 million tons of rolled products and is implementing a large-scale investment program to increase capacity to 2.5 million tons per year during 2021-2025. The enterprise employs more than 11,000 people. Its products are sold in all regions of the country and are exported to various countries of the world, including Europe. More than 90% of the Company's shares are owned by the Uzbekistan state. A significant portion of the Company’s shares is traded on RSE "Toshkent". Common and preferred shares of the Company have the status of highly liquid.
Disclaimer
This release contains forward-looking statements that reflect the current views of JSC Uzmetkombinat management regarding future events. They are generally denoted by the words "expect", "anticipate", "intend", "estimate", "aspire", "plan", "will", "forecast" and comparable expressions, and usually contain information that refers to expectations or goals regarding economic conditions, sales revenue, or other criteria for the success of an enterprise. Forward-looking statements are based on current plans, estimates, and expectations within the current legal and regulatory environment and are therefore only valid as of the date indicated. Therefore, such statements should be considered with caution. Such statements are subject to numerous risks and uncertainties (such as those described in publications), most of which are difficult to estimate and are generally beyond the control of JSC Uzmetkombinat. Relevant factors include the consequences of prudent strategic and operational initiatives, including the acquisition or disposal of companies (interests in them) or other assets. If certain risks and uncertainties arise, or if the assumptions on which the statements are based prove incorrect, the actual results of JSC Uzmetkombinat may differ materially from those expressed or implied in these statements. Uzmetkombinat JSC cannot give any guarantee that expectations or goals will be achieved. Uzmetkombinat JSC, despite existing legal obligations, disclaims any responsibility for updating forward-looking statements to reflect new information or future events or other conditions or circumstances.
