The sale of the Italian company Marcegaglia will allow it to establish a presence in Northern Europe, the Baltic countries. Sanctions against shareholder Mordashov made business in Europe “impossible”
Distribution will resume first in Latvia, and then in Poland, Ukraine
Russian mining and metallurgical company Severstal has completed the sale of its European network Marcegaglia Carbon Steel's Severstal Distribution, a subsidiary of the Italian steel rolling group Marcegaglia, has lifted the division from EU sanctions, the two steel companies said in separate statements on April 21.
Marcegaglia Carbon Steel has renamed its acquisition Marcegaglia Baltics.
"EU sanctions against (Severstal's majority shareholder) Alexei Mordashov have made it impossible for our distribution division to operate in Europe," the Russian company said. “Despite these restrictions, which we consider unreasonable and illegal, it is important for us that our colleagues from Severstal Distribution keep their jobs, and the assets that we have been developing over the years continue to work. Therefore, we are happy to transfer them to the new owner.”
Founded in 1992, Severstal Distribution, headquartered in Latvia, supplies Severstal steel products to the EU and Ukraine, partially processing them in its own large service center , specializing in slitting and slitting coils and thick steel.
In 2021, the last full year before Moscow’s military actions in Ukraine led to sanctions against many Russian companies, the division sold 1.85 million tons, or more than half of the total exports of Severstal, and the turnover reached 1.53 billion euros. This volume covers 30% of the apparent consumption of hot-rolled and galvanized coil and shaped pipes in the Baltic countries, according to S&P Global Commodity Insights.
Its network will now process and distribute products from Marcegaglia Carbon Steel, which has a capacity of 4.65 mln tons of flat products and welded pipes per year.
Marceglia's move allows it to establish a commercial presence in Northern Europe and the Baltic States, the Italian company said, adding that the distribution company's activities will be resumed first in Latvia and then in Poland and Ukraine.
The purchase comes a few months after Marcegaglia acquired Finnish Outokumpu's stainless steel long products division.
The companies did not disclose the amount of the deal, saying that Severstal's payment » has not been produced and will remain frozen in a special escrow account until the sanctions regime imposed by the EU ends.
