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Last Updated: Monday, 24 October 2005, 12:52 GMT 13:52 UK
Mittal wins Ukraine steel auction
Ukrainian President Victor Yushchenko
President Yushchenko has staked his reputation on the mill sale
Ukraine's largest steel mill has been bought by Mittal Steel for $4.8bn (2.7bn) after an earlier sale was annulled amid corruption allegations.

Mittal, the world's biggest steel firm, outbid a group led by France's Arcelor, and local company LLC Smart Group.

Ukraine hopes that the sale will underline its reform credentials and bolster creaking investor confidence.

The Kryvorizhstal mill was originally sold to the son-in-law of former President Leonid Kuchma for $800m.

It was one of the scandals that sparked the Orange Revolution and propelled President Viktor Yushchenko into power.


"The Ukrainian authorities have come of age," the President said after the auction has ended.

"What happened today shows Ukraine is capable of staging honest privatisations, observing all vital legal procedures."

Some analysts said Mittal had paid too much for the steel mill, with even Ukrainian officials expressing surprise at the high figure.

Dmitry Parfyonenko, deputy head of Ukraine's privatisation agency, said the price was "fantastic and unbelievable".

Looking closely

After sweeping to power last year, President Yushchenko said that Ukraine would look at thousands of earlier privatisations.

He has since dropped the plans, but the uncertainty surrounding those cases - as well as political infighting, which culminated in the dismissal of the government and prime minister - left many investors wary of putting money into Ukraine.

Kryvorizhstal furnace

It is hoped that the resale of Kryvorizhstal will help soothe some of these frayed nerves.

The resale has proved controversial with many politicians who object to the sale of one of Ukraine's most valuable assets.

The firm produces almost 7 million tonnes of steel a year, about 20% of the country's total steel output.

There also have been attempts to halt the sales by the group that first bought the steel mill for $800m.

Viktor Pinchuk, the billionaire son in law of Mr Kuchma, was part of that winning consortium.

Monday's auction was broadcast live on television and has been attended by Mr Yushchenko and former Prime Minister Yulia Tymoshenko.

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