UK sanctions Russian steelmaker Evraz

The UK government has placed sanctions on Russian mining and steel company Evraz due to its operations in sectors of strategic significance to the Government of Russia.

Evraz’s core operations are in Russia and it produces 28% of all Russian railway wheels and 97% of the country’s rail tracks, which were “of vital significance as Russia uses rail to move key military supplies and troops to the frontline in Ukraine,” the government said in a May 5 statement.

“Along with existing measures, this action will further deter companies operating in strategic sectors in Russia,” the UK said, adding that the asset freeze meant that no UK citizen or company could do business with Evraz.

“These sanctions will further chip away at Putin’s financial reserves and siege economy, and support Ukraine’s continued resistance,” the government said.

Steel prices have been boosted by reduced supply from Russia due to sanctions, with S&P Global Commodity Insights assessing Northwest European hot-rolled coil down at Eur1,250/mt, ex-works Ruhr May 5, up 36% since the start of 2022.

The UK ruled March 10 to freeze the UK assets of a few Russian oligarchs, including Evraz shareholder Abramovich, and prohibited them from entering the country and having any business with UK citizens and companies.

On March 11, all Evraz non-executive directors — Alexander Abramov, Alexander Frolov, Alexander Izosimov, Deborah Gudgeon, Eugene Shvidler, Eugene Tenenbaum, Karl Gruber, Maria Gordon, Sir Michael Peat, and Stephen Odell — resigned.

Evraz said at the time that Abramovich holds a 28.64% stake in the company and, over the last five years, appointed only two board directors.

Evraz also said it did not consider Abramovich as a person exercising effective control of the company, as he did not hold more than 50% of the shares and had no right to appoint or remove a majority of the board of directors. Evraz, therefore, considers UK sanctions against a shareholder shall not apply to the company itself.

Furthermore, Evraz denied in the statement that it had been involved in providing services, funds, resources, goods or technology toward destabilizing Ukraine, and said it had not supplied steel to the Russian military, which may have been used in the production of tanks. Evraz sells steel to infrastructure and construction sectors only, it added.

The company’s listing on the London Stock Exchange was temporarily suspended March 10.

This was followed by Evraz indefinitely suspending the spinoff of its coal business March 11, which was then canceled in early-April.

On April 6, the UK’s Trade Remedies Authority launched a review of steel imports from Russia and Belarus to assess whether the tariff rate quotas for the two countries should be reallocated to avoid a potential shortage of steel.

The TRA said at the time that due to sanctions imposed on some imports from Russia and Belarus, exporters may not be able to fulfil their quotas and reallocating them to other countries “could help ensure a regular supply of steel needed for construction, engineering, the automotive industries and other uses.”

— Jacqueline Holman, Ekaterina Bouckley