Russian Steel Sector Fuses Under Kremlin's Eye

June 5, 2006
After the announcement of a merger between Europe's Arcelor and Russia's Severstal, Russia's leadership is keeping a watchful eye over goings-on and, according to media reports, has its own plans for the future of the industry. President Vladimir Putin, ...

After the announcement of a merger between Europe's Arcelor and Russia's Severstal, Russia's leadership is keeping a watchful eye over goings-on and, according to media reports, has its own plans for the future of the industry.

President Vladimir Putin, who hailed the merger as an example of "positive outward expansion" by a Russian firm, was said to have given the deal his personal blessing at a meeting with Severstal chief Alexei Mordashov last month. To balance out the Severstal-Arcelor link-up, analysts say, the Kremlin is now planning to set up a state-controlled steel industry giant that would further strengthen Russia's competitiveness on international markets.

"With privatization, Russia's steel sector has restructured itself and is already fairly concentrated. But it is not efficient enough," said Andrei Deineko, an official from Russia's industry and energy ministry. Seven companies currently produce 90% of the 66.2 million tons that Russia produces every year -- some 10 million tons of this production comes from Severstal.

According to Russia's Kommersant daily, Russian billionaire Roman Abramovich is the pointman in the Kremlin's plans to create a metals giant. The oligarch has been in talks to purchase a stake in Russian steel group Evraz and is also reported interested in buying into Corus, the British-Dutch group, Kommersant said. Abramovich could be preparing a merger between Evraz and Corus, combining Western technology with Russian coal and mineral resources, Kommersant said.

The Vedomosti business daily said another Russian metals magnate, Alisher Usmanov, who heads Metalloinvest group, could bring his own assets into the new industry giant.

"There is an urge to merge. The more you concentrate, the better your price and cost power," said Peter Marcus, an analyst from the U.S-.based World Steel Dynamics research centre. Marcus said Russian firms Severstal, Novolipetsk and Magnitogorsk would be key players in a global shake-up of the industry that would create fewer, larger companies. "In the next half decade, there may be up to five 70-150 million ton steelmakers" in the world.

Copyright Agence France-Presse, 2006

Popular Sponsored Recommendations

Decarbonization Navigator: A Toolkit for Organizations

Sept. 28, 2023
The increasing urgency of addressing climate change along with stakeholder pressures are driving the need for organizations to prioritize decarbonization. Discover how to start...

You Cannot Stay Competitive by Bolting New Technologies to a Legacy ERP

Oct. 20, 2023
Read this white paper to understand the benefits of shifting to a next-generation ERP system as part of a DOP.

Digitally Transforming Data and Processes With Product Lifecycle Management

Oct. 29, 2023
Manufacturers face increasing challenges in product development as they strive to consistently deliver improved results. Discover how industry leaders are improving time-to-market...

Turning Your Frontline Workforce into a Competitive Advantage: A Comprehensive Guide

Sept. 19, 2023
In this guide, we'll explore how manufacturers are using digital technologies to preserve the bottom line and maintain growth by enabling and empowering their #1 asset - their...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!