Metalloinvest agrees to sell Ural Steel to Zagorsk Pipe Plant for $500 mln
MOSCOW. Feb 3 (Interfax) - Metalloinvest, a major Russian iron ore producer, has signed an agreement to sell 100% of shares in JSC Ural Steel to Zagorsk Pipe Plant, the company said in a statement.
The base purchase price is $500 million, subject to adjustment in line with the terms of the purchase-sale agreement, Metalloinvest said. The deal is expected to be closed in February.
Metalloinvest will continue to supply Ural Steel with iron ore raw materials on market terms.
"Metalloinvest is fully focused on developing assets in Central Russia to strengthen our leadership position in green metallurgy, namely the production of direct-reduced iron and products based on it. The transaction is in line with our Qualitative Change Strategy, enabling us to improve our profitability and optimize our trade balance. Production and use of coking coal, sinter, and pig iron will be completely eliminated from the Company's production processes, which will in turn reduce its direct greenhouse gas emissions by 48%," Metalloinvest CEO Nazim Efendiev was quoted as saying in the statement.
"Ural Steel will become an important part of ZTZ's strategy to build an integrated steel holding company," ZTZ CEO Denis Safin said.
Metalloinvest and Zagorsk Pipe Plant held talks in the spring of 2020 on a strategic partnership for the development of Ural Steel and ZTZ's acquisition of equity in the plant. ZTZ was looking at Ural Steel as a site for a new project - production of seamless oil grade pipes (OCTG). The company received permission from the Federal Anti-monopoly Service to buy 100% of the plant, but the parties called the deal off in the middle of last year, when Metalloinvest said it had dropped plans to sell Ural Steel and could build a modular direct reduced iron plant there.
Ural Steel has been a part of Metalloinvest since 2006. It is the leading Russian producer of steel for building bridges and supplies steel products for construction, pipe production, and shipbuilding. Ural Steel produced 2.4 million tonnes of pig iron and 1.5 million tonnes of steel in 2021.
Metalloinvest has invested around $1.2 billion in total in the development of the enterprise.
