A domestic consortium of investors backed by Turkey's powerful Union of Chambers and Commodities Exchanges (TOBB) yesterday unveiled a formal partnership to bid in the upcoming privatization of state-run steelmaker Erdemir. "Instead of becoming a small part of a multinational company we aim to develop Erdemir into one of the five largest steel makers of Europe and one of the 10 biggest producers of the world with in 10 years," said Rifat Hisarciklioglu, the president of the Union of Chambers and Commodities of Turkey speaking during a press conference in Istanbul. The partnership is called EOOG, an acronym of the Turkish name for the Ereğli joint venture group, named after the town where Erdemir is based. The steel producer's name is itself a shortened version of Ereğli Demir ve Çelik A.Ş. The list of investors in EOGG may grow before the final bidding process gets under way but now includes 34 Turkish iron & steel sector companies and large steel consumers. EOGG is competing with international bidders who are also interested in buying Erdemir. These include United States Steel Corp., Mittal Steel Co. NV (MT), Corus Group PLC (CGA), Arcelor (5786.FR), Novolipetsk Iron & Steel Corp. (NLMK.RS) and Severstal JSC (CHMF.RS). The Turkish government wants to hold a block sale for a 46.12% public stake and a 3.81% portion owned by Development Bank of Turkey (TKBNK.IS) in Erdemir next month, with final bids due on Sept. 24, as a key element its privatization program, which is backed by the International Monetary Fund. The new investor group in no way stands against foreign direct investment (FDI), said Hisarcıklıoğlu, pointing out that his organization for years has pushed for greater FDI in Turkey. The country's biggest problem is 5 million people being without jobs, and anything that helps that situation must be welcomed, he said. For example, it takes some $50,000 in FDI to create one job, by which standard Turkey would need $25 billion in direct capital investment to close the jobs gap, said Hisarcıklıoğlu. Rather than a stance against foreign investors, the partnership has three main concerns driving its bid for Erdemir, he said. First, all developing countries need a strong iron and steel sector; second, for competitive power, Turkey needs the encouragement of a strong partnership culture; and third, the country's political influence as a world and regional power would be enhanced by having a global company, according to the TOBB chairman. “Right now Turkey doesn't even have one truly global company, yet Erdemir has the potential to be the main steel producer in a great arc stretching from the Balkans to Central Asia,” he said. Erdemir now ranks number nine in Europe and number 11 worldwide. The firm's 7,500 workers last year produced more than 3.5 million tons of steel. Erdemir earned $473 million last year on gross revenues of $3 billion. The firm has a market capitalization of $2.5 billion, though any buyer of the state's shares is expected to pay a premium to gain control of the company. Spokesmen for EOGG could give no precise data on the group's financial resources. Executive board member Metin Kalkavan, a shipping magnate with Turkon Holding, did however reveal a $50 million minimum investment to join the group and a $1 billion maximum, with no single shareholder permitted to control more than 9 percent of the shares. However deep their pockets, they certainly face richer rivals for Erdemir in the likes of Mittal, Arcelor and Corus, three top global producers that have paid up for the tender process. Turkey last year imported some 5 million tons of steel and steel products, a significant drain on its foreign reserves, said Hisarcıklıoğlu. By increasing production to 10 million tons by 2010 and to 15 million tons by 2015, the new partnership can ensure a domestic supplier for most of Turkey's steel demand and also do the country a great service, he said.