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Russia based Novaem group in 100% takeover of ferromanganese producer Alapaevsk Iron and Steel Works

Russia based Novaem Group of companies is to acquire the ferromanganese producer Alapaevsk Iron and Steel Works, said reports. Russian media reports have indicated Novaem, specialized in the manufacture of equipment and supply of tubular goods and rolled metal products to the energy sector acquired 100% of shares of the Russian ferromanganese producer Alapaevsk Iron & Steel Works located in the Sverdlovsk region from the Ukrainian business group Privat Group.

However, the financial details of the deal have not been disclosed. A company statement from Novaem said the firm plans to resume the plant operations that went bust in 2005. The aim is to reach production at full capacity at the plant, and later switch to the development of new production. According to Novaem, the acquisition of Alapaevsk Iron and Steel Works is part of the firm’s long term strategy. The business fits well into Novaem’s production chain, noted Novaem.

Media reports have indicated Novaem is keen on commencing the production of pig iron at the plant, which will be offered to pipe making companies supplying to Novaem subsidiary Trubmash which is specialized in deliveries of tubular goods, fittings and power equipment for energy, gas and petrochemical companies.

Novaem Group specializes in manufacture of high-tech and power equipment. The company also supplies tubular products including welding tubes, seamless tubes, boiler tubes, non-ferrous tubes etc.

According to the Ministry of Industry and Trade of the Russian Federation, the Russian steel sector in 2010 grew by about 10% in comparison with 2009. Output has only just reached 2005 levels of production after the crisis. Crude steel production in 2010 grew from 59.4 million tons to 66.5 million tons. Finished steel output grew from 50.8 million tons in 2009 to 55 million tons (8.3% growth) and steel tube and pipe from 6.7mt to 8.2 million tons (23% growth).

Steel demand in Russia has been led by strong activity in the pipe and tube sector due realization of some large projects by Gazprom and Transneft. Production in the automotive industry recovered post-crisis thanks to the implementation of a ‘cash-for-clunkers’ program. Domestic consumption of steel pipes in 2010 was about 8.5 million tons, or 150% of the 2009 level - from which the LDP share was 3.0 million tons.

Total Russian steel tube and pipe production capacity reached about 13.5 million tons in 2010.

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