Until a few years ago Nikolay Valkanov's Minstroy Holding was rapidly expanding its metal mining business but now that seems to be changing. At the end of last year, Minstroy sold its 50% stake in local lead-and-zinc mining company Varba - Batantsi to the other partner in the company, Plovdiv-based metallurgical group KCM 2000. Now that KCM 2000 fully controls the largest lead-and-zinc miner in the country, which operates in the southern region of Madan, it plans to further develop Varba - Batantsi by investing some 30 million levs (15 million euro). That is part of KCM's strategy for vertical integration of the business: from mining of raw materials through processing them to manufacture of products at a later stage. In addition, the mines' development will benefit the region, where the company is the largest private employer.
The deal concerns 50% of the shares in Varba - Batantsi, which in turn is owner of Gorubso - Madan, also a metal mining company. Buyers are KCM 2000 and Rumen Tsonev, who is CEO and one of the main shareholders in the metallurgical group. After the acquisition, KCM 2000 holds 75% of the shares in Varba - Batantsi and Tsonev owns the remaining 25%. The price of the deal was not disclosed.
KCM 2000, which owns the Plovdiv-based lead-and-zinc smelter KCM, is practically the only company that buys lead-and-zinc ore in Bulgaria. Besides the mines in Madan, there are two other companies producing the raw material: Rodopi Eco Projects near Zlatograd, which is also owned by Nikolay Valkanov, and Lucky Invest, which is part of KCM 2000's portfolio. In Tsonev's words, however, Varba - Batantsi is the largest and most promising lead-and-zinc deposit in Bulgaria. "By acquiring it, we can now work more actively on developing it," he said.
Currently Bulgarian ore concentrates secure nearly 30% of KCM's capacity; as much is recycled material and the rest is imported. The group is resolved to increase the share of domestically supplied raw materials. "When this ambition is coupled with solid ownership, that is achievable," Tsonev said.
In the region of Madan, the group now controls three deposits: Varba - Batantsi (through the eponymous company) as well as Krushev Dol and Petrovitsa (which are operated by Gorubso - Madan). It also has an ore enrichment facility in the town of Rudozem.
The new owner has a 10-year plan for mine development, which envisages increasing concentrate production by 30 to 40%. "The geological reserves show there is capacity for expansion through targeted investment," Tsonev commented. The enrichment plant itself has sufficient capacity but funds will be directed toward implementing modern enrichment technologies and replacing some of the equipment.
The operational management of Varba - Batantsi and Gorubso - Madan will be preserved. "The team is young, ambitious and extremely well professionally prepared and that guarantees the business development," Tsonev said. The mines employ some 860 people.
Following the Varba - Batantsi deal, KCM now controls two of the three lead-and-zinc mining companies in Bulgaria. The third one, Rodopi Eco Projects, remains property of Minstroy Holding but
according to sources of Capital Weekly that may soon change, as Nikolay Valkanov is in talks with another potential buyer. A possible deal may also include Minstroy's mines in North Macedonia. Six years ago the holding group acquired concessions on operating Zletovo and Toranitsa mines there through its local subsidiary, Bulmak 2016. Nikolay Valkanov could not be reached for comment on his mobile phone by the time of writing of this article.