Severstal, better known for its steel operations, has boosted its stake in gold producer, Crew Gold, from 40.38% to a controlling stake of 50.17%.
Severstal commenced buying shares in Canada based Crew Gold in early 2010, and by February had a stake of 26.59% which later rose to 40.38% later in summer.
Since then Severstals’ Dutch subsidiary, Severstal Gold N.V, purchased a further 9.79% from minority shareholders, with the total amount of money outlaid to take control of the gold company estimated at about $237-245 million.
Nikolay Zelensky, CEO at Severstal Gold, said that the focus on gold for the steelmaker has the benefit of being counter cyclical and that its gold operations have performed well through the economic downturn of 2009.
“Obviously, Severstal in large has significantly reduced some of its CAPEX plans, as a reaction to the crisis, and this is very natural. Our business obviously was a bit countercyclical, and, interestingly enough, being a fairly small part of the business in terms of the size of the assets, we have contributed about 25% of EBITDA in 2009 to the overall Severstal operations. So, in difficult parts of the cycle the gold business has performed as a hedge towards adverse economic conditions.”