Ferrous Metallurgy 2000-2004

Ferrous Metallurgy 2000-2004 The four years of Vladimir Putin's presidency were very favorable for the Russian metallurgy industry. Growth began in earnest in 2001, when a surge of investments was recorded. Steel production increased 1.9% to 59.9 million tons in 2002, and production of rolled metal increased 3.8% to 48.5 million tons. This was despite increased prices for coal and coke, increased railway freight rates, and a poor world price situation. Production increases were achieved solely due to a revival of the domestic market. Photo: Sergey Voronin   Nearly all metallurgical companies have operated according to one scenario in recent years: investments – increased demand on the domestic market – increased exports due to the favorable market situation – price increases within Russian – investments. At the end of President Putin's first term in office, ferrous metal producers took advantage of the extremely favorable situation in China and the United States and almost brought the Russian prices of their products to world levels, although not without scandal. All of this was accompanied by a rapid consolidation of assets. In the period 2000-2004, the concept of “metallurgical plant” gradually gave way to the term “metallurgical group”. A similar situation was observed in nonferrous metallurgy. Analysts believe that the factors that led to the growth of Russian metallurgy in 2001-2002 will continue to operate at least until 2010. This is a visible success of the new industrial policy of the economic team working under Vladimir Putin in recent years, particularly since in practice, this policy appeared to be a refusal to interfere in the affairs of metallurgical companies and assistance in their international problems. History: 2000-2004 The events of the past four years have given the impression that totally different people own metallurgy in Russia. The psychology of metallurgical company owners changed completely when the state gave up trying to regulate this market. The History of the Managers The largest regrouping of forces in the Russian metallurgical industry occurred almost immediately after Vladimir Putin came to power. Within several months of his inauguration, a new pattern of forces had formed in the aluminum industry. Instead of going to war as expected, Roman Abramovich and Oleg Deripaska joined forces and set up the Russian Aluminum (Russky alyuminii) holding, which included the Krasnoyarsk, Bratsk, Sayansk, and Irkutsk aluminum smelters and the Achinsk Alumina Refinery (Achinsky glinozemny kombinat). In the course of these grandiose deals, former giants of the aluminum market left the industry, for example, the brothers Mikhail and Lev Chernoi, the head of the Bratsk Aluminum Smelter (BrAZ), Yury Shlyafshtein, entrepreneur Anatoly Bykov, and Krasnoyarsk Aluminum Smelter (KrAZ) co-owner Vasily Anisimov. The revolution on the nonferrous metallurgy market was the conclusion of a general process connected with the collapse of the TWG holding formed on the initiative of head of the Novolipetsk Iron and Steel Corporation (NLMK) Vladimir Lisin and head of the Sayansk Aluminum Smelter (SaAZ) Oleg Deripaska back in 1999. The collapse of TWG determined the new set of owners of a sizable part of the industry, which then subsequently remained almost unchanged. The exceptions were nickel production (where the Interros holding did not change its positions), copper production [where the actual owner of the Urals Mining and Metallurgical Company (UGMK), Iskander Makhmudov, only came out of the shadows a bit], and Severstal and Magnitogorsk Iron and Steel Works (Magnitka) where the actual owners were still Aleksei Mordashov and Viktor Rashnikov. In theory, there should not have been any radical changes in metallurgy, since in essence no new people appeared in it. However, even these shifts were enough to change the industry beyond recognition and transform it from one that was literally dying into the strongest and most developed industry in the Russian economy. The History of the Investments The switch by all Russian metallurgical companie