| The Severstal company acquired a stake in CJSC Izhora Pipe Plant (ITZ). The deal was recently registered by the Ministry of Antimonopoly Policy and Support of Entrepreneurship of the Russian Federation; its price was not disclosed. The metallurgical holding needed to purchase ITZ in order to enter a new market - the market for large-diameter pipes. As is known, the consumer of these products is the Gazprom concern.
At the former production site of Izhora Plants, Severstal is starting to create Russia's first enterprise for the production of large-diameter pipes (1420 millimeters) of two types - 18 and 24 meters long.
The metallurgical holding proceeded to implement this business project in stages. At the beginning of 2000, Severstal and Gazprom entered into an agreement for the supply of 200 thousand tons of pipes annually for five years from mid-2001. For this purpose, Severstal in April bought from the Izhora Plants group a mill designed for rolling thick, large-sized steel sheets. Now Severstal has bought a stake in ITZ from Kakha Bendukidze’s group (the CJSC was created several years ago by the Izhora Plants group, which contributed real estate to the authorized capital, and the German company Europipe, which will deliver from Germany the TESA 1420 rolling mill, intended for production of single-seam pipes).
“We have completed negotiations with Europipe and agreed on all the parameters for the additional issue of shares of the Izhora Pipe Plant, which will be held in January. Based on its results, ITU’s share capital will be redistributed - Europipe’s share will be 51%, Severstal’s share will be 49%,” said Severstal CEO Alexey Mordashov. The authorized capital of ITZ should be 80 million German marks.
According to Mr. Mordashov, after Severstal returns to Europipe the 1.5 million marks invested by the Germans in the dismantling, delivery from Germany and installation of the TESA 1420 mill near St. Petersburg, Severstal will increase its share in the share capital of ITZ to a controlling stake . This could happen as early as 2004-2005.
Unlike Europipe, which actually leases equipment, Severstal is investing “real” money in the project. By the end of the year, the metallurgical plant will allocate 1.5 million German marks to complete design work and begin construction work in Kolpino, where the ITZ is being created. $150 million is being invested in the reconstruction of rolling mill Mill 5000. Modernization has already begun and will make it possible to annually “roll” about 300-400 thousand tons of sheets, most of which will be used in the production of pipes. If Gazprom increases its orders, the mill’s capacity will be increased to 800 thousand tons. For this, as Alexey Mordashov promised, Severstal will invest another $150 million.” Victor MATVEEV, St. Petersburg
|
