Czech billionaires Tykač and Strnad team up on steel supply

Two Czech billionaires, Pavel Tykač and Jaroslav Strnad, are building an industrial alliance: steel from the Norwegian plant 7 Steel Nordic, owned by energy magnate Tykač, has started shipping to the Nová huť steelworks in Ostrava, closely tied to Strnad's industrial group CE Industries.

The first batch of steel billets — rectangular-section semi-finished products — arrived at Nová huť a few weeks ago. If the partnership develops as planned, Norwegian steel could eventually cover up to ten percent of the Ostrava plant's total raw-material needs.

“It all depends on Nová huť's specific needs, 7 Steel's production capacity, and of course the price. But so far everything looks good. I expect that, across different categories, this could amount to around ten percent of all material supplies,” Jaroslav Strnad told the paper Hospodářské noviny.

A key role in the negotiations was played by Libor Černý, who heads the metallurgy division of Sev.en Global Investments. He's no stranger to Nová huť: Černý worked at the plant for almost fifteen years, moving through a series of management positions.

“At 7 Steel Nordic we now have the chance to supply circular steel not just to our rolling mills in Scandinavia, but to outside clients too. I know Nová huť very well, since I spent a large part of my career there. This pairing of two Czech businesses made sense to me, and to my colleagues at Nová huť,” Černý noted.

He said the technical side was agreed on fairly quickly, but commercial negotiations took several months. The Norwegian supplies could also benefit from logistics: Strnad currently sources raw materials for Nová huť from several countries — Germany, Kazakhstan, and some is even shipped from Brazil. Transport from Norway would also benefit from the group's recently strengthened position in Polish ports — this year Strnad's companies, together with J&T, acquired a stake in the cargo ports of Świnoujście and Gdynia.

According to Černý, Nová huť needs hundreds of thousands of tonnes of semi-finished products each year, while 7 Steel can supply tens of thousands of tonnes. That means the value of potential supplies could range from hundreds of millions of crowns to several billion. The partnership could continue at least until Nová huť builds its own electric arc furnace, and the company is also considering supplies from the 7 Steel UK plant in Cardiff.

For Tykač, the deal is another step in expanding his industrial business beyond traditional coal mining. Two years ago his group Sev.en bought European steel assets in the UK and Scandinavia from Spain's Celsa, running on recycled scrap metal in electric arc furnaces — that's how the holding entered the “green” circular-steel segment.

This week a delegation from Nová huť, led by CEO Radek Strouhal, visited the Norwegian plant in the city of Mo i Rana to see firsthand how low-carbon steel is produced from recycled scrap using electricity from hydroelectric power plants.

By the Around Prague newsroom