Evraz Halts ZSMK Rail Mill to September for $600 Million Upgrade

Evraz Plc (EVR), Russia’s largest steelmaker, halted production at its ZSMK unit’s rail mill for five months to carry out a $600 million expansion project.

The upgrade will allow Evraz to boost rail output capacity at ZSMK to 1 million metric tons by September from 650,000 tons, Evraz said today in an e-mailed response to questions. The steelmaker part-owned by billionaire Roman Abramovich will be able to produce higher quality rails, including those 100 meters (328 feet) in length.

This year, OAO Russian Railways (RZHD) may have a shortfall of 18,900 metric tons of rails after Evraz shut the mill from April 1, Vedomosti reported today, citing an unidentified official at the Transportation Ministry. The company, which has annual consumption of 700,000 tons of rails, may use some from the state’s reserves agency, the newspaper said.

Evraz plans to compensate for the shortfall from next year’s production if needed, the company said by e-mail. Evraz’s other rail mill at its NTMK unit is continuing to work at full capacity of 500,000 tons a year, the steelmaker said.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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