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. Last Updated: 07/27/2016

Severstal Sees Capex Of $1.2Bln

Severstal, Russia's largest steelmaker, plans 2009 capex of up to $1.2 billion, UniCredit said in a broker report Wednesday, citing comments made by the company during a conference call.

During the call on Tuesday, Severstal investor-relations director Dmitry Druzhinin also said short-term debt stood at $1.7 billion to $1.8 billion, half of which is in rolling credit facilities, the report said.

The company declined to comment on the contents of the report.

Severstal, controlled by billionaire Alexei Mordashov, in November postponed most of an $8 billion investment program scheduled for 2009-2011 because of worsening conditions in the global steel market.

At that time, it also said that as of Sept. 30 its debts totaled $6.78 billion, up from $3.79 billion on Dec. 31, 2007.

Steel and mining companies have been hard hit by the global financial crisis, which has caused clients to stop paying for shipments, draining cash from the entire domestic production chain.

UniCredit analysts said, however, that Severstal's debt remains at a "comfortable" level.

"We believe the comfortable debt structure should allow the company to concentrate on its core activities," the bank wrote, adding that the weak ruble and geographical diversification provide a competitive advantage.

The bank also cited company data showing that its domestic operations are operating at 65 percent to 70 percent capacity, compared with 45 percent to 50 percent in December.

February capacity utilization at its European operations stands at 60 percent to 65 percent, equal to the December level.

Severstal's North American operations are now at 55 percent to 65 percent capacity, up from less than 40 percent in December.

UniCredit also wrote that Severstal has pushed through a 15 percent price increase for steel products from its Dearborn, Michigan mill.