Leaner Russian Steelmaker Severstal Targets Expansions and Acquisitions

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Researched by Industrial Info Resources (Sugar Land, Texas)--Severstal (Moscow), Russia's largest steel company, is splitting its operations into three separate divisions. Under the control of billionaire Alexei Mordashov, the company will create divisions focused on its Russian steel business, its international operations and its raw material assets consisting of coal, iron ore and gold. At the same time it will study the acquisition of plants in North America, Europe and Africa. The restructuring will give the $24.7 billion company a leaner, more focused structure that will improve competitiveness, productivity, cut costs and improve profitability.

The company is expanding the Cherepovets plant in Russia and building mini-mills at various sites across the country to service the booming construction sector. It is planning to invest $6 billion in Russia by 2011. Severstal has plans for gold production at the deposits it has acquired in Siberia. It has targeted a position among Russia's leading gold miners.

The division controlling the company's iron ore, gold coal mines and exploration projects, Severstal Resources, is considering assets in Kazakhstan following its acquisition in 2008 of Celtic Resources, a company operating the Suzdal and Zherek gold mines in the central Asian country. Severstal is also looking for resource projects in Africa with an emphasis on West Africa.

The company now ranks among the top five U.S. steel makers in terms of total capacity. It owns the former Rouge Steel plant in Dearborn, Michigan, and is a joint partner in the SeverCorr venture in Columbus, Mississippi, and is now acquiring the Sparrows point mil in Baltimore, Maryland, in a $810 million deal.

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