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. Last Updated: 07/27/2016

Severstal Aims for $6Bln Yearly Investment by '09

bloombergAlexei Mordashov
Steel major Severstal wants to boost annual investment in its domestic operations to 167 billion rubles ($6 billion) by 2009, its chairman said Tuesday.

Speaking at an investment conference organized by the Association of Russian Managers, Alexei Mordashov said this year's total investment would be around 52 billion rubles after 28.7 billion rubles in 2004.

Severstal, which has been expanding fast due to high global demand for steel, has worked out an ambitious growth strategy and wants to create a global production-to-sales network by aggressively acquiring assets abroad.

The company, which runs a steel producing unit in the United States, plans to raise output at domestic plants to 12.5 million tons by 2010 from last year's 10.4 million, and expand rolled steel output to 10.9 million tons from 9.3 million in 2004.

Under international accounting standards, its net profit more than doubled last year to $1.3 billion from $591 million in 2003.

Severstal gained a foothold in western Europe earlier this year when it announced it would buy 62 percent of debt-laden Italian steelmaker Lucchini by injecting 430 million euros ($560 million) into the group.

A Severstal spokesman, speaking on the sidelines of the conference, said anti-monopoly authorities in the European Union were likely to approve the deal by mid-April.

Severstal officials have said that, once the Italian deal is finalized, the company might start considering new acquisitions.

"We are quite optimistic about these things. We are looking at all possible opportunities," Mordashov said.

"If a deal is economically, judicially and politically viable, we are going to go for it regardless of the region."

Of total investment planned for this year, Severstal plans to spend 13 billion rubles ($466.1 million) to strengthen its raw materials base compared with 5 billion in 2004.

This year's upstream projects include construction of a key enrichment plant in the huge Kuzbass coal field in Siberia where Severstal, like many other steel producers, runs a coal mining subsidiary.