Severstal, Anglo American to Jointly Explore Metal
World biggest mining company, Anglo American and Russia’s Severstal of Alexey Mordashov have declared they set up an alliance to explore nickel, copper and zinc in Russia. This move of the companies, the analysts speculate, may lead to closer cooperation. Anglo American will probably split out Anglo Ferrous Metals and merge it with Severstal.
Anglo American and Severstal have set up an alliance for joint exploration of nickel, copper and zinc in Russia, mostly in Karelia and Murmansk region, Anglo American said in a statement.
Severstal has been long working in selected regions that could be rich in deposits of nonferrous metals and it has assets there. Regardless, Norilsk Nickel would have been a potential partner of Anglo American in this undertaking, the analysts speculate, but Rio Tinto and BHP set up respective alliances with it at the start of this year.
For Anglo American, Russia isn’t a new market. It has an agreement with Eurasia Mining for developing platinum deposits in the Kola Peninsula. As to Severstal, it has never promised to confine to the ferrous metallurgy and may easily launch another business. If the project succeeds, Severstal will get nonferrous metals to produce stainless steel and alloy steel, said Alexander Paramonov, analysts at Ak Bars Finance.
According to the analysts, relations of Severstal and Anglo American are likely to become closer than just an alliance. As market capitalization of the companies differs significantly (Anglo American costs $70 billion and Severstal has just $13 billion), it won’t be a simple consolidation. The possible scenario is that Anglo American splits out its Anglo Ferrous Metals division for further merger or sale to Severstal.
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All the Article in Russian as of Oct. 06, 2006
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