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Severstal strengthens its position in the domestic market for small and medium-sized pipes

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PAO Severstal, one of the world's largest vertically integrated steel and mining companies, has received permission from the Federal Antimonopoly Service to acquire a 20% stake in OOO Production Association Nizhne-Volzhsky Trubnyzavod (NVTZ), a large pipe enterprise located in Volzhsky in the south of Russia and occupying 60% of the construction pipe market in the Southern Federal District. The deal is scheduled for completion within the next month. The sum of the deal has not been disclosed.

“The acquisition of a stake in the Production Association NVTZ is fully consistent with the approaches of the updated strategy of Severstal - in the search for reliable partners, the development of the product portfolio while increasing the share of marginal products in it in order to provide a qualitatively new, better customer experience. This partnership will allow us to expand the range of products for small and medium-sized pipes and respond to the implemented investment program of the rolling redistribution of the Cherepovets Metallurgical Plant in improving the quality of rolled metal. At the same time, the agreements reached will help Severstal develop its sales geography through established, stable supply chains of NVTZ ", - comments Severstal CEO Alexander Shevelev .

" Such a solution is possible call it a natural consequence of the successful long-term partnership of our companies. A truly innovative stage in its development was the production of the first pipe for the domestic market under a partnership scheme between an inter-pipe plant and a steel manufacturer. We have implemented this project with the then United company "Akras DIA", which became part of NVTZ, and we continue to develop after the merger of partners. The new deal is our joint step towards the development of the Russian small and medium diameter pipe market. Combining 30 years of experience in the manufacture of tubular products at NVTZ enterprises and the capacity of our partner with modern sales and delivery schemes, approaches to organizing an optimal and efficient production chain, quality control used by Severstal, we see the potential for our development, "says Severstal's director of Evgeny Chernyakov.

Since April 2020, Nizhne-Volzhsky Pipe Plant has united the capacities of three manufacturers of small and medium-sized pipes in the Southern Federal District of Russia: TZ Profile-Akras,

"PK DIA" and "VTPZ". Now the partner's production site includes 17 electric pipe mills with a total capacity of more than 600 thousand tons of products per year. Steel pipes of NVTZ are suitable for water and gas supply, construction of prefabricated buildings and greenhouses, arrangement of playgrounds, park areas and other objects of urban infrastructure, furniture, etc. Russian industry - Severstal - will allow our production association to continue its development, to remain the first choice for our customers in the supply of pipes. As a result of the partnership, NVTZ will gain access to modern management and quality systems, including in the field of labor protection, since Severstal is today the industry leader in terms of safe production. In addition, the presence of the largest producer of coiled steel among the NVTZ participants will lead to an expansion of the offer of small and medium-sized pipes for our customers at competitive prices, will allow us to guarantee the availability of high quality products, regardless of the market situation. This partnership reinforces the position of our enterprise as the largest producer of small and medium-sized pipes in the south of Russia and the largest exporter of MSD pipes in the CIS market, ”comments Maxim Zimovets, General Director of Production Association Nizhne-Volzhsky Pipe Plant.

Solution strengthens Severstal's position in the domestic small and medium diameter pipe market, as well as in the CIS countries. Previously, the key markets of the company were the Center and North-West of Russia. The acquisition of a stake in NVTZ will ensure the company's presence in the Southern Federal District, as well as in the Central Asian market with hot-smoked and cold-smoked pipes of small and medium diameter, which means a significant expansion of the geography of supplies. NVTZ already supplies products to the CIS countries - such as Kazakhstan, Azerbaijan, Kyrgyzstan, Uzbekistan, Armenia.

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