The list of Russian businessmen and public persons in the new, expanded EU sanctions list, published on Tuesday, includes Alexey Mordashov and Alisher Usmanov, owners of Severstal and Metalloinvest, respectively.
This makes them “subject, under EU Sanctions, to an asset freeze and the prohibition to make funds and economic resources available to them”, meaning that neither steelmakers’ production will be available for EU buyers.
Out of the two companies, Severstal appears to have been hit more significantly, having been a staple supplier of hot rolled coil to the European market for many years. Last year, the firm exported around 3.5 million tonnes of flat and long steel products, mostly HRC, to Europe. As Mordashov is the company’s majority owner, it is almost certain that these supplies will have ceased with immediate effect for the duration of the sanctions.
Severstal also has a significant infrastructure of service centres and offices in Europe, whose future is uncertain at present. Latvia-based Severstal distribution, the former Severstallat, is the largest service centre in the EU belonging to the company, producing long and flat products, Kallanish understands. Its fate is also now uncertain.
Mordashov issued a statement on Monday night, citing his remote attitude to politics and a lengthy engagement “in the development of economic, cultural and humanitarian cooperation with many European countries.” He concluded that he failed “to understand how these sanctions against me will contribute to the settlement of the dreadful conflict in Ukraine”.
The company is understood to be looking at alternative routes of supply for its products, understandably looking at Asia, and other, currently non-sanctioning regions, Kallanish understands.
Meanwhile, Metalloinvest appears to be significantly less impacted by the sanctions. The company issued a statement explaining that sanctions “are of a personal character and will not affect Metalloinvest”. It adds: “Mr Usmanov owns less than 50% of USM Group’s parent company and does not control the Group’s enterprises.” Metalloinvest continues to carry out business as usual, fulfilling obligations to its employees and partners, it continues.
The latter is likely to produce a collective sigh of relief from its many European buyers of iron ore in Eastern and Central Europe, and metallics and pig iron in southern and Western Europe, which the company supplies on long-term formula-based contracts. US pig iron buyers are also likely to be relieved, as Ural Steel, the main supplier of merchant pig iron to the US and Europe, no longer belongs to Metalloinvest. The sale of the mill to Zagorsk Pipe Plant (ZTZ) was completed on 1 March.
