MOSCOW. (RIA Novosti economic commentator Oleg Mityaev) - Russian steel magnate Alexei Mordashov and Lakshmi Mittal, the owner of ArcelorMittal, the word's largest steel company, are finding more common ground.
On March 21, Mordashov's Severstal announced its purchase from ArcelorMittal of Sparrows Point, a steel mill in the United States, for $810 million.
On all counts, this is a very profitable deal for Severstal. Analysts suspect that Mittal was so accommodating only because in January Mordashov sold him some attractive mines in the Kuzbass coal basin at a very reasonable price.
But just two years ago no enemies were more implacable than Mordashov and Mittal. At that time the British-based Indian outbid the Russian in the race to merge with Europe's largest steel company, Arcelor. The result was the emergence of the world's absolute leader in steel production, ArcelorMittal.
But time does not stand still, and business interests are beginning to prevail over past grudges. At the end of January 2008, to the surprise of many, ArcelorMittal announced the purchase from Severstal of three coal mines complete with supporting facilities in Russia's Kemerovo Region for $720 million.
This asset is particularly attractive, for thanks to the growing demand for coking coal - which is produced by these mines and used in steel production - its value will only rise. At the time many wondered why Severstal got rid of the mines by selling them to a former uncompromising opponent.
The latest deal has made many things clear. Severstal has bought Sparrows Point in Baltimore, Maryland, from ArcelorMittal for just $810 million, although a year ago ArcelorMittal wanted $1.35 billion for it. True, the deal did not come off, and the steel giant was under pressure from U.S. anti-monopoly authorities to divest itself of the plant; but no one could have prevented ArcelorMittal from bargaining and choosing a customer ready to fork out a larger sum.
Somehow or other, Severstal has made a good purchase in America, one which, according to Severstal's spokesmen, will bring the Russian company no small profit. The point is that it is not the first acquisition by Severstal in America: it has been buying up American steel holdings since 2004, and now has a subsidiary there - Severstal North America (SNA). They say in the Russian company that Sparrows Point will be a nice addition to Severstal's American business, making savings on costs and production integration.
Experts agree that Severstal has acquired a very promising holding at a very attractive price. Indeed, a week previously, another Russian steel holding, Evraz, bought Canada's Claymont Steel for $2.3 billion, or $1,255 per ton of steel produced by that company. In comparison, Sparrows Point cost Severstal just $225 per ton.
Severstal estimates that this deal has made it the fourth largest steel producer in the U.S. - with 8 million metric tons a year - after ArcelorMittal, Nucor and U.S. Steel.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
