Tenaris suspends operations in Russia
MOSCOW. April 14 (Interfax) - Tenaris, an international steel pipe manufacturer, has suspended operations in Russia.
"Tenaris has suspended all sales to and purchases from Russia. It has also decided to write off its investment in a Russian joint venture that it had with Severstal," the company said in a statement.
Tenaris said earlier in its annual report that it was considering options for moving or closing its representative office in Moscow.
Russian steelmaker Severstal and Tenaris suspended their project to build a plant to manufacture OCTG in the Khanty Mansi Autonomous District back in 2020 amid difficult market conditions and the coronavirus pandemic. The suspension of the project was extended again in December 2021 to reassess the market situation and the costs of the venture.
Tenaris holds a 49% stake in the project and Severstal has 51%. The venture was supposed to have capacity to produce 300,000 tonnes of OCTG per year. The companies planned to invest $280 million in the project.
The partners completed all engineering surveys in 2020 and were prepared to start the next phase of the project, but then the pandemic hit. At the end of 2021, Tenaris estimated investment in the project at about $16.8 million.
In its report for 2021, which was released after the start of Russia's military operation in Ukraine, Tenaris said that the Russian joint venture was affected by factors such as the conflict between Russia and Ukraine and the imposition of EU and UK sanctions against Severstal's controlling shareholder, and did not rule out exiting the venture.
Tenaris estimated that it bought about $34 million worth of raw materials, primarily ferroalloys and pig iron, in Russia and Ukraine in 2021. The company said it was looking for alternative sources due to the disruption of supplies from Ukraine and sanctions against Russia, and that it might have to pay higher prices to ensure supplies of the feedstock needed for steel production.
The company estimated that sales to Russian customers accounted for just 0.2% of its total global sales in 2021.