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Evraz Seeks Rolling Mills in Asia to Process Steel From Russia

Dec. 9 (Bloomberg) -- Evraz Plc, the steelmaker admitted to the FTSE 100 index this week, is considering options for rolling mills in Southeast Asia to process semi-finished product from Russia, said Senior Vice-President Pavel Tatyanin.

“Evraz produces more semi-finished steel than it can process domestically, and almost 70 percent of it goes to Asia including Philippines, Taiwan, Thailand, Indonesia and Vietnam,” Tatyanin said in an interview in Moscow on Dec. 6. “We can add value setting up steel-rolling facilities” in those markets.

The company may acquire or build rolling mills, depending on the projects’ return on investment, Tatyanin said. While the company sees potential acquisition targets, it has no immediate deal plans, he said. Following its switch in primary listing to London, Evraz may in future consider using shares as currency for acquisitions, he said.

Evraz, which has its headquarters in Moscow, started its business from steel mills in the Urals Mountains and Siberia. The company has spent $7.8 billion to expand in North America, Europe and South Africa since 2006, when Chelsea football club’s billionaire owner Roman Abramovich became its largest shareholder. Evraz also holds a 15 percent stake in Chinese steelmaker Delong Holdings Ltd.

Exporting rolled products from Russia isn’t an option for Evraz because there is a risk this will prompt antidumping measures, Tatyanin said. In addition, Asian customers prefer local suppliers with shorter lead times, he said.

Integration Effort

Evraz sold 2.73 million metric tons of semi-finished steel for $1.75 billion in January through September this year, which accounted for 14 percent of revenue and 23 percent of steel volumes sold, Evraz said in a Nov. 15 report. The third-quarter price for semi-finished steel was $537 a metric ton, compared with $743 a ton of rolled products, Evraz said Oct. 17.

The steelmaker plans to boost integration between its plants globally, said Tatyanin, who oversees international business at the company. Evraz already supplies semi-finished steel from Russia to its rolling mill in Portland, Oregon.

Evraz is weighing building an electric arc furnace at the Evraz Vitkovice mill in the Czech Republic to produce steel from scrap, should its contact to buy hot iron from ArcelorMittal’s Ostrava unit not be extended beyond 2014 when it expires, Tatyanin said.

It is considering plans to ship vanadium from its deposits in other countries to its Stratcor unit in the U.S. for processing, according to Tatyanin.

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

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