Russia Metals and Mining

Izhora plants win tender of Tatneft

Izhora plants of the OMZ group have won tender for supply of reactor and column equipment for Tatneft’s heavy coker gasoil hydrotreating unit, the plant’s press centre reported.

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Japan will be engaged with geological exploration in Siberia and Far East

Rosgeo negotiates with the Japanese Inpex Corporation, Japex and the National Oil and Gas Corporation about cooperation in geological exploration of hydrocarbons and solid minerals in Eastern Siberia and Far East. The sides discuss development of well drilling technologies onshore and offshore, and development of hard-extractable and non-traditional hydrocarbon resources.
Eastern Siberia and Far East are the most important regions from the point of view of development of the Russian resource base. The strategy of Rosgeo presupposes activation of the work there in near years.

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NLMK Group announces new stage of development by implementation of Strategy-2017

The NLMK Group, the largest Russian and leading international steel producer, has announced new stage of development due to start of the Strategy-2017 implementation.
The Strategy-2017 provides for investments in the amount of $1.6 billion and additional income in the amount of $1.0 billion per year. The strategy is aimed at the disclosure of the company’s internal potential on account of the increase of the industrial chain’s operating efficiency, the strengthening of the vertical integration in the key types of raw materials, the growth of high value-added products sales, as well as the continuation of programs in the field of environmental protection, industrial safety and the development of human capital assets.
The Group will continue the conservative financial policy, aimed at the further reduction of the debt burden and the financing of investment projects on account of the internal cash flow. Due to this approach, the Group plans to achieve ratio net debt/EBITDA in the amount of 1.0x.
In addition, the NLMK Group intends to pay at least 20% of its net profit under US GAAP to shareholders and to maintain the average level of dividends in the amount of 30% of the net profit during the next 5 years.

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The current year to be difficult for companies in mining and metallurgical industry in Russia and the CIS

In 2014,an improvement in the economic situation in the mining and metallurgical industry will promote a growth of transactions in the M&A market of this industry, which is recovering after the lowest indicators of activity in the last seven years.
According to the EY study "M&A transactions and attraction of investments into the mining and metallurgical industry: trends of 2013 and 2014", in 2013 the low activity was observed on the M&A market in the industry. Excluding the merger of Xstrata and Glenore, the number and value of M&A transactions fell by 25 % and 16% to 702 transactions and $87.3 billion dollars respectively. This is the smallest rates of deals number in the sector since 2006 and their value since 2009.
A similar trend was observed in the market of capital attraction: the number of listings declined by 9% to the lowest rate since the global financial crisis in 2008, while the volume of borrowing grew by $272 billion, which was a result of loans refinancing in emergencies.

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NMLK gets judgement on 7.3 billion roubles from Nikholay Maksimov.

Novolipetsk Steel (NLMK) has managed to get judgement  to collect 7.3 billion roubles from Nikolai Maximov, the former owner of "Maxi-Group". Mutual claims of the parties are processed in the courts for the last few years, but are still far from the end.
On February 7th the Moscow Arbitration Court invalidated the agreement to sell 51 % of "Maxi-Group" shares, concluded in November 2007 between the owner of Nikolai Maximov and NLMK Vladimir Lisin.
The Court charged the 7.329 billion roubles of advance, paid to Mr. Maximov, in favor of NLMK, NLMK representative in the lawsuit stated to "Kommersant". NLMK filed the lawsuit in March 2011

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In January, dispatch of Russian metal products to domestic market decreased

According to railway statistics, in January of the current year, the dispatch of rolled steel and pipes to the domestic market and for export by the main metallurgical and pipe plants of Russia made up 5.07 million tons. This is by 0.4% more than in December, but by 4.4% less than in January of 2013.

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ArcelorMittal gained revenue of $40 billion

In Q4, ArcelorMittal gained revenue of $19.9 billion (+3%), and increased steel smelting by over 10% to 23 million tons, and pretax profit by 23% to $1.9 billion. EBITDA increased from $1.56 billion to $1.91 billion . The analysts forecasted the index at a rate of $1.81 billion. Steel supplies increased from 20 million tons to 20.9 million tons. Iron ore production increased from 14 million tons to 15.4 million tons.

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In 2013, Evraz could reduce revenue by 6% to $13.9 billion

 Morin, the analyst of Sovlink LLC
The agency has renewed the appraisal of fair price of EVRAZ stocks concerning the market situation in the sphere of prices for raw materials and metal products for 2013 and the renewed macro forecasts. They have to state that unfortunately the year 2013 did not confirm the expectations in the sphere of growth in prices for raw materials and metal products. Due to slowing down in the ratio of the growth of the Russian economy, toughening in competition in the internal and external metal item markets, a growth in production and sales of steel by China, the prices for most of the sorts of the Russian metal products reduced. In average, metal item prices reduced by 10-15% in USD, and metallurgy raw materials prices reduced by 5-10% in USD. At the background of unfavorable price situation, business profitability reduced in most of mining and metallurgy companies due to reduction in profit from metal items sales, and decline in production in some cases.

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Cherepovets metal works raises price for rolled steel made in March

Cherepovets metal works, a Severstal’s subsidiary raises price for rolled steel made in March. In particular, they raise price by 4-7% for hot rolled thin steel, by 6-10% for hot rolled thick steel, by 7% for cold rolled steel, by 2% for galvanized steel, by 4% for rolled steel with polymer cover, by 3% for dynamic steel, and by 3% for pipes. The growth in prices is explained by favorable price situation and stable demand at the global market accompanied with weakening in ruble rate and the current Russian prices that are much lower now than in average in the world.

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Severstal decreases capital costs

This year, the holding company’s total investment program will make up $976 million that is less than the program of the previous year ($1.3 billion).
$487 million will be invested into division Severstal Russian steel. The company’s main capital costs for development - $150 million – will be used to complete construction of bar section plants in Balakovo, to reconstruct a cold rolling mill at the Cherepovets metallurgic plant and to complete construction of a service facility in St. Petersburg. Earlier representatives of the company stated that the bar section plant in the Saratov region will become the last investment program of the company, which was connected with new construction.

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