Russia's steel elite, with cash to burn from record profits, has accumulated almost 10 percent of U.S. steelmaking capacity as it bets big that demand in the world's largest economy will ride out a global credit crunch.
Billionaires who built their fortune on Soviet-era steel giants have spent nearly $9 billion in the last few years acquiring U.S. mills to expand their global presence. At today's knockdown prices, investors believe it's a gamble worth taking.
"They're buying them because they're cheap. The underlying motive behind buying these mills is making money, not enhancing the political glory of Russia," said Tim McCutcheon, a partner and fund manager at DBM Capital Partners in Moscow.
Betting on U.S. steel is risky, say analysts, as the once-mighty automotive and construction sectors are in decline and demand growth has been eclipsed by emerging economies such as China and India.
But this has not deterred Alexei Mordashov, owner of Severstal, whose acquisitions have pushed his company into the top five steel makers in the United States -- a scenario unthinkable when the countries were Cold War enemies.
Read the full story at UK Reuters
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