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. Last Updated: 07/27/2016

OMK to Put $2Bln Into Pipes

Steel pipe maker United Metallurgical Company, or OMK, will start construction on a new steel mill on May 30 that will form the centerpiece of a $2 billion investment to boost supplies to the booming oil and gas sector.

OMK president Vladimir Markin said Tuesday the investment program would run until 2010 and that the company, which meets up to one-fifth of the country's steel pipe demand, would spend 45 billion rubles ($1.74 billion) on the Mill-5000 project alone.

"We plan to be a company producing the full cycle of products," Markin said.

Mill-5000 will be built at the company's Vyksa Metallurgical Plant and is expected to produce 1.2 million tons per year of wide steel plate for making pipes. Production is scheduled to begin in 2010.

Markin said OMK, which is not listed, sold about 90 percent of its steel pipes in the domestic market and counted Gazprom and oil-pipeline firm Transneft among its customers.

OMK competes in the Russian market with TMK, the world's third-largest steel pipe maker by market capitalization, the ChTPZ Group and Severstal's Izhorsky Pipe Mill.

Markin earlier said Russian steel pipe makers should work together closely in order to avoid overinvestment and duplicating investment projects.

"That could lead to a crisis of overproduction in the future and a sharp rise in competition and, as a consequence, an increase in the payback period for investments," he said.