July 29,
Russia’s steel sector is joining the global race for key raw materials as prices rise, developing assets in remote locations at home while bidding for mines abroad, where competition from global rivals is intense.
Severstal, Russia’s largest steel producer, has made several moves in Africa this year. It has raised its stakes in two gold miners active on the continent and in May it said it would buy 16.5 percent of Core Mining, which holds the rights to Iron ore mines in Gabon and the Republic of Congo.
“Certainly, our priority is raw materials”, Chief Executive Alexei Mordashov said last month. “At this time I am not prepared to say how much we plan to invest as it all depends on the quality of the projects. We want to start with raw materials, mainly iron ore and possibly coal, and we are already involved in Gold production.” Though the trend towards internationalisation is likely to continue, there are disadvantages for Steel companies in moving beyond the borders of resource-rich Russia. Bidding against Chinese and other global rivals for licences pushes up prices, while investing heavily in Africa exposes companies to risks from dealing with unstable governments.
It’s not so much a Russian strategy as part of the global strategy of some of the major Russian steel companies, as they have operations in North America and Europe. In terms of the logistics, this will give them assets that will provide better logistical access to their fabricating facilities located in end markets.
Source: Reuters
Leave a Reply