Severstal Plans New $500M Mill

Severstal, the country's largest steelmaker, plans to spend $500 million to build a steel mini-mill in the Saratov region amid a construction boom, the company said Friday.

The mill will produce 1 million tons of bar sections from 2010, the company said in a statement. Severstal supplied 1.5 million tons of steel for Russian builders last year and has a market share of about 9 percent.

"There's not so much a deficit of steel products for construction now, but given the capacities and growth forecasts, there certainy could be in the near future," said Alexei Morozov, an analyst with UBS in Moscow.

Sales of steel products, such as rebar and reinforced steel, to the national construction market grew by one-third last year. Domestic steelmakers may add an annual 3 million to 4 million tons of capacity in coming years, UBS says. Demand  is forecast to grow by 5 million tons this year.

Severstal wants to expand its existing plant in Cherepovets or add another elsewhere in the country, billionaire owner and CEO Chief Alexei Mordashov said June 2.

The Saratov mill will be located in the municipal unit of Bykovo-Otgorskoye, 160 kilometers from the city of Saratov. It will use metal scrap as its raw material, eliminating the need for the initial steel-pouring process that results in greenhouse gas emissions, Severstal said.

Source: The Moscow Times, Monday, July 16 — 2007