Metallurgical giant Severstal stopped deliveries to the EU countries following the sanctions against its main shareholder Alexei Mordashov.
Some people are profiting greatly during the pandemic, while others are suffering.
Last year, Alexei Mordashov was ranked first in the Forbes list. He has a fortune of $29.1 billion, a record for 18 years. The pandemic actually helped him to make more profit, as the production of metals and coal decreased globally, but Russian enterprises, including Severstal, continued to operate and earn super profits from selling their products on the world market.
Severstal
The history of Severstal, a Russian steel and mining company, dates back to 1955. In the mid-1990s, Alexei Mordashov orchestrated the privatization of the company, leading to the dismissal of the general director of the Cherepovets plant. Today, Severstal is closely associated with Mordashov, who owns over 77% of the company's shares and employs approximately 50,000 people.
Sanctions
In the eyes of the West, Alexei Mordashov is a significant figure in the Kremlin. Consequently, he was placed on the EU sanctions list due to his company's involvement with the Rossiya bank in Crimea and the National Media Group.
According to the sanctions document, individuals on the blacklist, including Severgroup, are not allowed to enter EU countries and their assets in the EU are frozen due to their involvement in selling wind turbines to Crimea.
Response
Alexey Mordashov addressed the sanctions imposed on him by stating, “I have focused on creating economic value for the companies I have worked with in Russia and abroad, and I have no links to the current geopolitical tensions. I do not understand why sanctions have been imposed on me. I have been actively involved in promoting economic, cultural, and humanitarian cooperation with European countries. I fail to see how sanctions against me will help resolve the conflict in Ukraine. It is a tragedy that Ukrainians and Russians are suffering, and the economy is collapsing. We must urgently find a resolution to halt the bloodshed and help the affected people restore normal life.
As you know, even if you are out of politics, politics can always come to you, or for you. However, Mordashov did not remain out of politics. On the eve it became known that Severstal stopped deliveries to the European Union in response to sanctions against Mordashev. “We officially confirm that we have stopped deliveries to the EU due to the sanctions imposed on the shareholder. We are redirecting commodity flows to alternative world markets,” a company representative said.
According to Severstal, on average, annual deliveries to Europe amount to about 2.5 million tons (this is 21.5% of the total output of 11.647 million tons in 2021) and about a third of the company’s total revenue. According to the World Steel Association (WSA), EU countries produced 152.5 million tons of steel in 2021. Alexei Mordashov will have to look for new markets quickly, but experts doubt that under the current conditions, the billionaire will be able to take advantage of high market prices and a low ruble exchange rate.
In the meantime, the shares of Severstal are expected to fly down following the market, and the vacant place in Europe has already been noticed by the main competitor, ArcelorMittal.
So Alexei Mordashov still needs to try to keep the palm in the Forbes list of Russian oligarchs.
