In his speech at the Panel II: International Steel: Fewer Players, More Winners, A. Mordashov, Severstal's general director and chairman of the executive board, shared his vision of the situation in the Russian steel industry and its perspectives. He said that beginning of this year more than 50 trade investigations has been taken against Russian steel exporters as a result the total Russian exports of long and flat products will reduce by 5 million tones from 25 million tones in 2001 to 20 million tones in 2002.
   "Since the export markets shrink, some of the Russian steel companies, including Severstal, focus more on the internal market. But the restrictive issue here is the slow growth of the domestic steel consumption. According to various assessments, the Russian domestic market this year will grow no more than 5%. It is obvious that while the export is going down, the relatively slow rising domestic consumption can not allocate the whole steel output, bringing in the threat of crisis in the industry. In this situation the main ways to overcome it are the restructuring of the industry and the development of the domestic consumption," said Mordashov. He believes, that in the domestic market consumption may increase with the evolution of the national automotive industry and with the development of house building like what happened in the US.
   According to Mordashov, several different approaches can be taken in restructuring Russian steel industry. "One of them is elimination of state aid and subsidies. There are some small steel businesses in Russia, operating obsolete and loss making facilities. Their financial problems are facilitated by the local authorities. Within the industry's restructuring process those companies can be integrated into large industrial groups. In other words, the multi-industry groups can be formed on the basis of the large metallurgical companies, able to transform to the modern global corporations", said Mordashov.
   He also mentioned some approaches where governmental support is vital, "They are the clear and predictable tariff policy in energy and transportation costs, as well as the social obligation- since more than 70% of the Russian metallurgy enterprises are the only real budget supporters in the region".
   However, Mordashov stated, "Under these hard conditions Severstal remains the leader of Russian ferrous metallurgy. The company makes more than 16% of the national steel output and with its US $1.8 billion turnover runs the 10^th position among the country's biggest corporations".
   At request of the organizers of the conference, Mordashov also touched upon the issue of Severstal restructuring. "There is a program underway to restructure the Company's assets to form a holding company with three self-dependent divisions, including the steel division, the raw materials division and the automotive division", said Mordashov. In 2001, the total turnover of the group was about US $2.5 billion and its personnel around 150,000 people.
   According to Mordashov, "The main aims of restructuring are: to make the companies of the group more transparent and competitive, to create additional value of the companies shareholders through the increase of the mutual capitalization of separate companies, to attract investments and to introduce the company to the American and European stock markets§?".
   The most important world steel event of the year is attended by over 600 CEO, presidents and senior executives of the global steel industry. It is cosponsored by American Metal Market and World Steel Dynamics.
   The participants will work in 7 panels to discuss an array of issues including cutting output, consolidation and mergers, forecast of when the industry will regain pricing power, the minimills solution, steel company finance, strategies in distribution, trading, e-commerce and forward selling, how the protectionism will effect the manufacturing customer base, wild card technologies in the steel game, etc.
   Alexei Mordashov, Severstal's general director, has spoken at the II panel: International Steel: Fewer Players, More Winners. The list of distinguished speakers also includes Guy Doll?¦, CEO of Arcelor, - the world's largest steel company and a partner of Severstal in a joint plant to produce galvanized sheets for automotive industry. The total capital investment into the project is US $180 million. The production line will be built and launched in 2004, capable to produce up to 400,000 tones annually.