Severstal budgets $1.7B capex this year

RUSSIAN-headquartered steelmaker and mine owner Severstal says it will invest $US1.7 billion in 2012 as it seeks out new opportunities and improves the operations and safety of its mines.

Donna Schmidt

“Severstal’s investment priorities for 2012 include further modernizing and improving … operations, raising standards of health and safety and developing new projects both in Russia and internationally,” the company said on Monday.

Specifically, Severstal said it would earmark $659 million for Severstal Resources for key projects including the modernization of its coal and iron ore mines as well as ore-dressing plants and coal preparation facilities.

It will also install new equipment and commission a thermoelectric power station to burn coal mine methane in Vorkuta.

Greenfield project developments for the Tuva complex in Russia, Liberia and Brazil will also be developed under the budget.

The producer will spend $104 million on projects for Severstal North America, including maintenance and development projects and environmental programs as well as health and safety, IT infrastructure and customer care.

The remaining $905 million will be invested in its Severstal Russian Steel arm.

Its plans for the capital expenditure budget include the continued construction of a mini-mill in Balakovo in Russia, production unit renovations and other projects.

Overall, officials said capex for 2012 was in line with that of 2011, excluding the now-independent Nordgold.

“Funded by our strong balance sheet we will invest significantly in the company’s assets in Russia which, in line with our stated strategy, will be the focus of our 2012 investment program, as well as in the completion of the modernization program at SNA,” chief financial officer Alexey Kulichenko said.

“We will also continue to search and analyze new investment opportunities, which will help us to achieve the company’s key strategic goal of being one of the global industry leaders by EBITDA.”

Severstal, the fourth-largest US steelmaker, already controls Pennsylvania-based PBS Coals, which has several mines in the state and it operates steel mills in Dearborn, Michigan as

well as Columbus, Mississippi.

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