Open / Close Advertisement

MMK Completes Acquisition of Russia’s Largest Scrap Collector and Processor

06/04/2009 - The Magnitogorsk Iron and Steel Works OJSC acquires 99.99% of ZAO “Profit”, Russia’s largest metal scrap collector and processor.

The Magnitogorsk Iron and Steel Works OJSC (MMK) has acquired 99.99% of ZAO “Profit”, Russia’s largest metal scrap collector and processor.
 
The transaction encompasses the acquisition of ZAO “Profit” subsidiaries that specialize in the collection and processing of scrap. The company said the acquisition will significantly strengthen its security in terms of raw materials supplies, as ZAO “Profit” has historically covered MMK’s total demand for outsourced scrap. For example, in 2008, scrap supplies from ZAO “Profit” accounted for 75% of MMK’s 5-million-plus tonnes of scrap consumption.
 
MMK is ZAO Profit’s key customer and strategic partner, historically consuming more than 80% of the company’s overall sales volume (83% in 2007 and 87% in 2008). ZAO “Profit” does hold additional contracts with a number of other steelmakers, including Severstal’s Chelyabinsk steel mill, Ural Steel’s Volzhsky pipe mill, Izhstal, and ZSMK.

MMK plans to consolidate ZAO Profit’s financial results into the MMK Group of companies starting from the second half of 2009.

ZAO “Profit” conducts scrap purchases in 64 regions of Russia, with the Chelyabinsk, Moscow, Nizhniy Novgorod, Samara regions and the Republics of Bashkortostan and Tatarstan accounting for more than 40% of scrap purchases. For the full year 2008, ZAO “Profit” delivered 5.2 million total tonnes of scrap and held a 16.2% share of the market; revenues amounted to RUR 60 billion, and net income totaled RUR 1.1 billion. 

Since 1998 the group has adhered to the strategy of creating its own chain of regional scrap collection units, building up to more than 25 scrap collecting and processing members by the beginning of 2009. These members are situated in 26 regions of Russia and unite more than 300 scrap collecting sites.

The Magnitogorsk Iron and Steel Works OJSC (MMK) ranks among the world's largest steel producers and is one of the leaders of Russia's steel industry. The company is a large steel producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel.  MMK turns out a broad range of steel products with a predominant share of value added goods. In 2008, the company produced about 12 million tonnes of crude steel, and about 11 million tonnes of commercial products.