Employment, Financial Services, Latvia, Legislation, Markets and Companies, Metals Market

Igor Talanov, the board chairman of KVV Liepajas Metalurgs, said that, according to preliminary estimates, about 300 of the total of 402 workers currently working in the plant would have to be laid off.

The layoffs will be effected strictly in compliance with the effective legislation as regards the notice periods and compensations due to the workers, he said.

KVV Group announced last week it had been forced to take a decision on the conservation of KVV Liepajas Metalurgs steel plant because the negative factors hampering the company's operations – the crisis in the global metal industry, the company's debts to secured creditors and the Latvian government's reluctance to provide assistance to the industry – were persisting.

Despite the difficulties, the company's shareholders had been trying to resume productions and start a constructive dialogue with the government. The shareholders worked out a debt restructuring plan and expected the government to provide comprehensible answers about possibilities to cut the electricity price for the company.

"We based our plans an assumption that the shareholders and the state have one common interest – to preserve one of Latvia's largest taxpayers, to develop the metallurgy and ferrous metal industry, to preserve jobs for hundreds of people. Unfortunately, all we saw was the government increasingly distancing itself from the company's problems," Talanov said earlier.

Latvian Finance Minister Dana Reizniece-Ozola (Greens/Farmers) told the press following the March 15 government meeting that the government had put off the decision on KVV Liepajas Metalurgs, waiting for the company to provide answers to a number of questions and to confirm that it was prepared to make its own investments to ensure that it stayed in business in the long-term.

KVV Liepajas Metalurgs, based in Liepaja port city in soth-western Latvia, has been struggling with financial trouble lately. The company's management has blamed the difficulties on a high electricity price and complicated situation in Europe's metal industry. The company has had difficulties paying its electricity bills and wages to workers. It has also missed the deadline for a payment it was supposed to make to the Latvian state for the Liepaja-based plant. KVV Group, which acquired Liepajas Metalurgs under an agreement signed on October 2, 2014, is supposed to pay for the plant EUR 107 million in several installments over the next 10 years.