The Russian steel producer Maxi-Group has asked the Russian government for assistance in financing its capacity expansion projects.
On October 31, Maxi-Group's owner Nikolay Maximov wrote an open letter addressed to the Russian president Vladimir Putin asking for government assistance in financing the group's steel projects. Mr. Maximov emphasized that, due to the US financial crisis, the Russian banks the company works with have for two months now declined to refinance its previously-agreed credits. As a result, Mr. Maximov continued, Maxi-Group is obliged to spend all of its operational capital on credit repayment. He said the situation was negatively affecting the company's production, employees, and was pushing Maxi-Group toward bankruptcy.
Since 2001 Maxi-Group has been engaged in the construction of several steel mini-mills. So far, the company has three functioning mini-mills which jointly produce about two million metric tons of crude steel a year. In addition, Maxi-Group is involved in the following activities: capacity expansion programs at its three existing mills; commencement of construction of a new mill in the Kaluga region; preparation for the construction of a new mill in Tolyatti; and project preparation work for new mills to be built in the regions of Voronezh, Novosibirsk and Sverdlovsk.
With the successful implementation of all these projects, Maxi-group will be able to raise its annual steel production capacity (including flats, longs, pipes and hardware) to 20 million metric tons by 2012.
However, Mr. Maximov warned that without government support the company would not be able to survive.