DERIPASKA - Rusal + Norilsk + Metaloinvest
POTANIN – other part of Norilsk
ABRAMOVICH – Evraz
USMANOV - Metaloinvest
PROBLEMS –
1)Potanin and Deripaska are not going to agree on much. Potanin also doesn’t want to sell anymore to Deripaska, who will insist.
2)Will Deripaska’s suit for Metaloinvest pit him directly against his best-friend Abramovich? In the past Potanin and Abramovich have teamed up & Abramovich has thrown some weighty ppl under the bus before.
3)Or will Deripaska and Abramovich team up against Potanin?
4)What about consolidating all the small steel companies in Russia? Lots of powerful men to get rid of.
Severstal
Alexei Mordoshov
Novolipetsk Steel
Vladimir Lisin
Alexey Lapshin
Mechel
Vladimir Iorikh
Igor Zyuzin
Gazmetal
Alisher Usmanov
EVRAZ -
Alexander V. Frolov,
Roman Abramovich
Alexandre Abramov
HISTORY
A deal was struck in 2006 to begin a major consolidation of the metals industry, involving Deripaska, Abramovich, ______. Consolidate each sector under separate companies to dominate steel, nickel, aluminum, etc.
Evraz wants Metalloinvest & Severstal under its umbrella
Rusal wants the rest of Norilsk and Metalloinvest under its umbrella
A lot has been happening on the steel front in Russia in recent weeks to suggestthat a broad consolidation of the sector may be imminent. Among thedevelopments have been Evraz’s acquisition ofOregon Steel; formation of a joint venture between Duffercoand Vladimir Lisin’s Novolipetsk group; and new rumours on a tie-up between Alexey Mordashov’s Severstaland Alisher Usmanov who owns Gazmetalland Metalloinvest. The moves in question are obviously being closely followed by the Kremlin.Keen on fostering the creation of national champions in industries it considersstrategic, Moscow would clearly like Russian steel sector to imitate what Rusalhas done in aluminium, becoming, as the latter has, the world’s top producer.
In recent months, Roman Abramovichhas emerged as the figure most likely to unite a fragmented industry made up ofmedium-sized players who mostly hate one another, a legacy of the murderousturf wars of the mid 1990s. Abramovich, governor of Chukota and owner of the Chelsea football club, made a spectacular and mysterious debuton Russia’s steel scene early this summer by acquiring a 41% holding in the Evraz groupthrough his holding company Millhouse Capital. It was by no means clear at the time why Abramovich had returned to Russia
only months after succeeding in selling his leading asset, the Sibneftoil company, to Rosneft. Hence the rumours he had been allowed to cash in his chips
with Sibneft in return for undertaking a “mission” in the steel sector on the
Kremlin’s behalf.
Whatever the case, matters don’t seem to be passing off as smoothly as Abramovich and Alexandre Abramov, executive president of Evraz, would appear to wish. The group’s acquisition of Oregon Steel – an agreement between the shareholder of Evraz and Oregon was reached in lateNovember – supposedly fit into the Kremlin’s game plan for further consolidation in the industry. However, the deal couldrun into trouble. The Congressional committee that oversees foreign investmentin the United States is taking a close look at the $2.3 billion transaction. Itcould even veto the acquisition if it finds that “Evraz is owned, controlled and influenced by Russian government interests orothers.” Which, in the instance, seems highly probable.
Be that as it may, Evraz will have to do without its 37-year-old chief executiveofficer, Valery Khoroshkovsky, in dealing with the Oregon Steel question and in conducting the group in thecoming steel battle. Despite his tender age, Khoroshkovsky served as economyminister under Ukrainian president Leonid Kushmabefore moving over to Evraz in 2005. He has just resigned from the group to takea seat on Ukraine’s national security and defense council (SNBO) at the behest of president Viktor Yushchenko.
Evraz has also run into stiff resistance from its Russian rivals in its quest tounite the industry. Mordashov and Usmanov are reportedly deep in talks on amerger between Severstall, Gazmetall and Metalloinvest. Weakened by the failureof his takeover bid for Arcelorthis summer, Mordashov would prefer such an alliance between equals than to bestuck in the role of junior partner in a huge steel group run by Abramovich. A merger between Severstgall and Usmanov’s companies would make a good industrial fit and produce a group turning out 22million tons of steel and 58 million tons of iron ore per year. Also anxious to preserve his independence, Lisin, boss of the Novolipetskmetallurgical complex NLMKthat achieved revenue of $4.5 billion in 2005, has opted to form a joint venturewith Dufferco named Steel Invest & Finance S.A. The arrangement will cost Lisin EUR 805 million but enable him to strengthenhis hand in Western Europe where the assets that Dufferco is to fold into thenew JV are located.
Although the Russian government has kept fairly quiet up to now, Moscow hasannounced plans to hammer out a development strategy for the steel industrynext spring to cover the period between 2010-2015. Between now and then,however, the course of events could greatly alter the industry’s profile.