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Yildirim could play role in South African FeCr consolidation, Metal Bulletin

STOCKHOLM, SWEDEN, September 17, 2012 — Yildirim Group President and CEO Robert Yuksel Yildirim would consider involvement in the consolidation of the South African ferro-chrome industryif the price and the combination of assets were right, he told Metal Bulletin on Friday September 14.

The group - which operates in a broad range of sectors including mining, energy, shipping andshipbuilding and private equity - is acquisitive and open to various investment opportunities, Yildirimsaid on the sidelines of Metal Bulletin’s 11 International Stainless Summit in Stockholm.

“I’m hunting companies to find good deals. In one month our group made offers worth over $700million to acquire five companies in the ports, power and oil and gas sectors. We made the lastoffer last week. We signed two deals and in the other three we’re frontrunners,” he said.

Yildirim - who owns Eti Krom and Vargon Alloys in Turkey and Sweden - is cautious about furtherinvestment in the struggling ferro-chrome industry, and while he remains interested in investmentopportunities in ferro-chrome, he is less pro-active than in other areas of his business.

“I would look at options if approached but I’m certainly not going to push for a hostile takeover inthe ferro-chrome industry,” he said.

As long-standing calls for the consolidation of the ferro-chrome industry intensify, Yildirim believesstrongly in the consolidation of the South African industry.

In recent months, Xstrata has been the only South African ferro-chrome producer not subject totakeover rumours and a four-way merger of Ruukki, International Ferro Metals (IFM), Hernic and ASAMetals has already been discussed.

Yildirim himself has previously been reported to have shown interest in buying IFM or Hernic or acombination of the two.

Takeovers of single companies will not achieve anything, according to Yildirim, who believes thesurvival of the ferro-chrome industry is dependent on the combination of complementarycompanies or assets.

“I’m saying if someone is coming in they should buy a bundle to achieve smart consolidation,”Yildirim said.

Ferro-chrome producers are overpriced, he believes, but he has not ruled out participating in such adeal in the future, possibly as part of a consortium or with private equity backing.

“I could consider IFM and Hernic; there are good synergies between them. I still have this interestand I keep it open but [asking] prices are too high at the moment.

”An acquisition of IFM and Hernic would take total ferro-chrome production under the Yildirim Groupto one million tonnes - a longstanding goal.

High carbon ferro-chrome assets are of greater interest, though.

Apart from Eti Krom, Vargon Alloys and ENRC, DCM Decometal and Mechel also produce high carbonferro-chrome in Europe and Russia.

DCM Decometal has already said it is looking for a buyer for a Russian ferro-titanium plant, sparkingrumours that other assets could go up for sale, while Mechel has also been suggested as a potentialtakeover target.

Again, Yildirim would not rule out acquiring assets from either company if approached, but has noplans to make an approach, he said.

In the future, Yildirim may look at joint ventures in the Chinese ferro-chrome industry, he said.

“In China when a good asset becomes available down the road I could be interested in joint venturesbut not acquisitions,” he said.

The company could bring ore from Turkey to China and would seek to work with a company that hadefficient, modern furnaces for the production of high end products.

“We want to be at the high end supplying to foundries and manufacturers of long products, alloysteel and engineering steel,” he added.

“It’s a niche market and there isn’t much competition. I’d rather be in the blue water than the redwater; I don’t want to see the blood of the competition too much.”