LNM Group, headed by India-born steel baron Lakshmi Mittal, has failed to acquire Ukraine's biggest steel plant Kryvorizhstal that produces over 6 million tonnes annually, and asked the Ukrainian government to investigate the tender as the winning bid was much lower than the amount offered by his company-led consortium.
The Ukranian Investment and Metallurgical Union won the bid.
"We are disappointed with the results of the tender for the privatisation of Kriyviy Rih mining and smelting plant --Kryvorizhstal," said a statement from LNM, which formed a consortium with the US Steel Corporation and some others.
The LNM-led consortium urged the Ukrainian president and the prime minister to investigate the tender process as "it understands that the winning bid is UAH 4.26 billion, which is substantially lower than the LNM-US Steel Consortium bid.
"The LNM-US Steel Consortium submitted a very strong bid, which totaled some UAH 14.31 billion ($2.7 billion)
"This comprised UAH 7.95 billion ($1.501 billion) for the 93 per cent equity plus an additional UAH 6.36 billion ($1.2 billion) for the implementation of a capital expenditure programme. The LNM-US Steel Consortium offer exceeds several times the announced winning bid of UAH 4.26 billion."
Ispat Karmet, a member of LNM Holdings operating in Kazakhstan, and Ispat Polska Stal, another member of LNM Holdings operating in Poland, are also members of the consortium.
LNM, the world's second largest steel producer, said the bid also addressed environmental and social commitments.
"The LNM-US Steel Consortium guaranteed all existing jobs and declared its commitment to maintaining and improving social harmony at the plant and fulfilled all the terms of the tender relating to this issue.
The LNM-US Steel bid and proposed development plan also comprise reaching steel production in excess of 11 million tonnes, providing access to global markets for Kryvorizhstal, increasing supply to the domestic market, ensuring EU compliance on environmental issues, building a strong flat products capability and commitment to purchase Ukrainian raw materials including iron ore and coke.
"LNM and US Steel believe that their bid, together with their combined financial strength, industry experience and unrivalled track record in privatisation, offered a unique opportunity to both the Ukrainian economy and its steel industry. In addition, the financial offer reflects a true market value of the assets which is superior to any other offer published in relation to the Kryvorizhstal privatisation.
"The consortium is disappointed that the State Property Fund chose to ignore this opportunity and believes that Ukraine has missed a real opportunity by effectively ruling out foreign bidders from the privatisation of Kryvorizhstal."