Severstal to cut $6.1 bln investment program for 2014-2017
CHEREPOVETS. July 22 (Interfax) - Russian steelmaker Severstal plans to scale back its investment program for 2014-2017, currently estimated at $6.1 billion.
"We'll probably reduce it," the company's principal owner, Alexei Mordashov told reporters, without specifying the scope of the possible cuts. The stated capex plans for 2013 of $1.3 billion will not be revised, but capex in 2014 will be less than this, he said.
Mordashov also said the company plans to cut administrative expenses by 20% this year compared to 2012.
Severstal announced senior management changes last week. The company appointed Vadim Larin, formerly CEO of Severstal Resources, to the new position of first deputy CEO and chief operating officer. The company also said that Alexander Grubman will step down as CEO of the Severstal Russian Steel division. He will be replaced by Sergei Toropov, who previously worked at Severstal before becoming CEO of the Krasny Kotelschik, a division of Power Machines , which is also controlled by Mordashov. In addition, the position of vice president of corporate strategy will be eliminated "in line with the company's focus on organic growth." Thomas Verazsto, who held this position, has been appointed an advisor to the CEO.
Mordashov said that there would also be restructuring and downsizing of management at group companies. Severstal will aim to create a "short distance between managers and production," he said.
It was reported earlier that Severstal plans to channel most of its investment this year into the Russian Steel division. Among other things, the company plans to complete construction of a mini steel mill in Balakovo, build and develop specialized service centers, complete building the second phase of Severstal Gonvarri Kaluga, modernize Izhora Pipe Plant and overhaul the Oryol plant Severstal Steel Solutions.
Projects at Severstal Resources include construction of inclined shafts at the Zapolyarnaya and Vorgashorskaya mines, the expansion of the Pechorskaya central enrichmental plant, exploration in Olenegorsk and the expansion of mining operations at iron ore mines. The company also plans to develop Severstal North America, but this division requires less investment than the other two divisions.