The Russian steel producer Novolipetsk Steel (NLMK) has announced the acquisition of a 51 percent plus one share in fellow domestic steelmaker Maxi-Group. The total of $600 million agreed for the stake is to be paid in two installments - half upon the transfer of shares to NLMK and the balance, which also is subject to price adjustment, after the completion of due diligence.
NLMK believes that this acquisition will not only help the company to strengthen its domestic longs market position, especially in rapidly developing regions such as the Ural, Volga, and Central and Southern Regions of Russia, but also will help the company to be 100 percent self-sufficient in scrap.
Upon the acquisition, NLMK plans to develop its business by rapidly increasing its output, maintaining low production costs and by developing its raw materials base. Maxi-Group will compete with established steel producers through low cost local production and regionalized sales to growing markets.
As previously reported by SteelOrbis, 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.