MMK Set to Slash Q4 Capex by 40%

Magnitogorsk Iron & Steel Works, or MMK, will slash its capital expenditures for the fourth quarter by 40 percent, the company's vice president, Rafkat Takhautdinov, said in an interview published on its corporate newspaper's web site Monday.

The market will stabilize "not earlier than the second quarter of 2009," Takhautdinov said, adding that he believed that the impact of the crisis would be overcome by 2013.

"Only state investment can revive the construction and infrastructure projects," Takhautdinov said. "Even [if the investment is made] the market's quick recovery will be hampered by the stockpiles of metal kept in warehouses."

Several of the country's largest metals companies have proposed that the government introduce customs duties on several metal products to reduce imports and speed up the payment of refunds on the value-added tax charged on exports, Takhautdinov said, without naming the companies. The firms also asked for state guarantees on loans earmarked for Russian-made equipment and for the term of the loans to be extended.

Also on Monday, the MMK stopped deliveries to GAZ Group, the country's second-biggest carmaker, controlled by billionaire Oleg Deripaska, after it delayed payments, Interfax said, citing an unidentified Magnitogorsk official.

Carmakers owe 3 billion rubles ($111 million) to MMK and 8 billion rubles to pipe making companies, the report said.