Novostal-M sets up transport co in Senegal
ST. PETERSBURG. July 28 (Interfax) - Russian steelmaker Novostal-M has set up a freight transport company in Senegal to operate its own fleet and expand logistics capacity in Africa.
The company, whose key assets are the Abinsk Electric Steel Works (AESW) and Steel Factory Balakovo, has had a presence in Africa since 2016 and sales in this region account for about 20% of its total exports, Novostal-M beneficiary Ivan Demchenko said at the Russia-Africa summit.
However, there is currently no infrastructure in Africa that is friendly toward Russia, he said.
"Of course, creating such infrastructure without government support is simply impossible. Cooperation between government and business is the key element here," Demchenko said, adding that Russian state lender VEB has "become actively involved" in this process.
He recalled that Novostal-M is buying bulk carriers and will continue to create its own shipping fleet. The company now has five bulk carriers and plans to acquire another five vessels by the end of the year, Demchenko told Interfax in June.
"But one's own fleet today is more expensive than chartering from the Chinese. In other words, basically we are currently more expensive than our Chinese competitors - there is currently no scheduled return load, so it's impossible to calculate how this will develop," Demchenko said on Thursday.
"For the Chinese, the African region is a strategic region. They have streamlined shipments of 100,000-tonne vessels with steel, foodstuffs, plumbing fixtures to Africa. Then they load alumina, iron ore products and other types of products onto the bulk carriers and ship them home, making shipment far cheaper," he said.
He said Novostal-M does not have full return loads at the moment for objective reasons, as ties with Africa are just being restored.
"We need to count on the government here in terms of support. [...] It would be great if the transport subsidy was distributed not only according to technological criteria but also geographical," Demchenko said.
Demchenko told Interfax earlier that Novostal-M was in talks with Russian development institutions on building infrastructure abroad. "There has been very good feedback. In other words, we will engage in construction of ports, warehouse facilities and the creation of our own logistics hubs," he said.
Russia's main exports to African countries at the moment are fertilizer, forest products and metal products, Deputy Industry and Trade Minister Vasily Osmakov said at the Russia-Africa forum.
He said the government is adjusting measures of support to the needs of exporters to African markets.
"This export market needs its own recipes for support, logistics support - subsidies for logistics costs, special subsidized credit programs. And right now we are adapting instruments specifically for new markets, for entering new African markets, within the context of our International Cooperation and Exports national project. In other words, we are increasing the level of subsidies for logistics costs, we're making support for loans specifically more preferential," Osmakov said.