EU pays steel giant 300 million euros to cut emissions

Leading Russian steelmaker Severstal has received 300 million euros from the European Bank for Reconstruction and Development to slash its toxic emissions, among the highest on the continent. The leading Russian steelmaker wants to improve its pollution r

The company is also looking to expand into other sectors, eyeing stakes in car-maker Avtovaz as well as rival metals producers.

The EBRD signs over a third of the 900 million euros that Severstal has pledged to spendon cleaning up its operations.

The firm promises to slash carbon dioxide emissions from its plants by 900,000 tonnes a year. Severstal’s communications chief was unable to name a figure, but the firm’s said to be one of the biggest polluters in Russia. Now the steel giant is in a race against time to avoid Kyoto-based fines already in force in the West, reaching 100 euros per tonne or a fifth of the steel price.

The EBRD was set up to help developing companies in developing nations. Its boss defended lending money to one of the world’s most aggressive steelmakers, owned by Russia’s ninth richest man.

“It’s not only about money, it’s also about quality standards. You know that we’ve been working with Mr Mordashov for years. He is always taking the lead among  business people. He's at the cutting edge of technology and sound management,” stressed Jean Lemierre, the President of the EBDR.

Severstal is in a period of frantic expansion. The metals major has now secured approval from 84% of Celtic shareholders for its takeover of the gold miner, as well as stakes in machinery giant Power Machines and Europe’s top tour operator Thompson.

Its CEO told RT it was interested in further metals acquisitions, but would reject the recent merger proposal from chief steel rival Evraz.

“As in the case of gold, we could also look at other options open to us, of course primarily in CIS countries, Russia and maybe in some other regions where we could see good opportunities for us. Regarding Evraz we don't have any plans,” commented Aleksey Mordashov, CEO of Severstal.

The next move, Mordashov told reporters on Monday, is to consolidate and spin off these acquisitions into separate sector-specific companies, with a view to their sale or Initial Public Offering.