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. Last Updated: 07/27/2016

Novolipetsk, Duferco Form $1.6Bln Venture

Itar-TassThe companies will invest $492 million in high-quality steel products.
Novolipetsk Steel, the steelmaker owned by billionaire Vladimir Lisin, agreed to form a $1.6 billion joint venture with Switzerland's Duferco Group to make and distribute the alloy in the United States and Europe.

Novolipetsk, or NLMK, will pay $805 million for 50 percent of the venture, which will control 22 companies owned by Duferco, NLMK said in a regulatory filing Monday.

The companies, including Duferco Farrel in Pennsylvania, had combined sales of $2.6 billion in the one-year period that ended Sept. 30, 2005, and output of 4.5 million tons of finished product the following year.

The Duferco deal will make Lisin the third Russian billionaire with steel assets in the United States, after Severstal's Alexei Mordashov and Evraz Group's Roman Abramovich. Russian metals and energy companies are expanding around the world as President Vladimir Putin encourages the creation of global champions, Alexander Shokhin, the head of the Russian Union of Industrialists and Entrepreneurs, said last week.

"This transaction is another step of NLMK's strategy of developing a high value-added product portfolio while enhancing its presence in international markets," Lisin said in the statement.

The two companies also agreed to invest 375 million euros ($492 million) to boost output of high-quality, specialty steel products and NLMK's supply of semi-finished products.

Lisin's $10.7 billion fortune makes him the country's third-richest man. Abramovich has $18.2 billion and Vagit Alekperov of LUKoil has $11 billion, Forbes Russia estimated in March.

Last week, Evraz, 41 percent owned by Abramovich, said it agreed to buy Oregon Steel Mills for $2.3 billion, the biggest-ever purchase by a Russian company in the United States. That deal will push Evraz, the country's biggest steelmaker, to 10th in the world, ahead of Germany's ThyssenKrupp.

Mordashov's Severstal bought bankrupt Rouge Industries, a supplier to Ford Motors, for $285.5 million in 2003, and was outbid for Luxembourg's Arcelor earlier this year. He may now make a bid for U.S. Steel, Kommersant said Nov. 17, citing unidentified people familiar with the plan.

The venture with NLMK is "an excellent example of global steel industry consolidation," Duferco chairman Bruno Bolfo said in the statement.