OAO Severstal is to invest between $1.5 to $2 billion a year in raising output and mining more raw materials. The company is Russia’s second largest steelmaker. It needs the material to feel its own plants and also expand its sales at home and overseas.
The Chief Executive Officer of the company Alexey Mordashov said in an interview in London that mining was an essential part of our company, a very strong generator of revenues and earnings. He added that the contribution of mining will be bigger in the future. As per him their strategy was about upstream integration into raw materials and presence on the markets with good opportunities to grow.
The Russian company has bought iron ore deposits in Brazil and West Africa in an effort to counter balance the rising cost of raw materials for steel making. They have also sold three steel mills in the US in March that was not making a profit. They also separated from their Italian Lucchini SpA unit in 2010.
Severstal is hoping to nearly triple its iron ore output from last year to 38. 2 million metric tons, by the year 2020. It hopes that its mines in Latin America and Africa will help them achieve this aim. They are also forming a joint venture in India with state owned NMDC Ltd to build a steel plant in the state of Karnataka.
Mordashov said that it was good to be in mature markets as long as you can have a sound business model, like we have in the U.S. now after the reshuffle of our portfolio. He added that because of very clear fundamentals, we believe we should follow the trend of the market and be more focused on Asia.