Many Russian steelmakers prefer to build new plants at home, in a strategic shift away from foreign acquisitions, as they take advantage of high profit margins at low-cost domestic mills, Reuters reported on June 27.
Avoiding Western European and North American investments that previously burdened the Russian steel industry with debts, leading Russian players such as Severstal, Evraz and Magnitogorsk Iron & Steel Works (MMK) are now building at home, where they have easy access to raw materials, cheap energy and labor.
Russian steel producers are boosting profitability, furthermore, by increasing value-added production, such as the launch of a plate mill by MMK in 2009 to supply Russian pipe makers and other producers.
However, in some cases, Russian companies choose to develop greenfield projects in other developing economies that offer many of the same cost advantages found in Russia. For instance, while MMK launches a new plant in Turkey, Evraz is building a new steel mill in Kazakhstan.