Akhmetov looks (to expand assets in the) West

Rinat Akhmetov and his SCM Group are well known in Ukraine.  He is purportedly the wealthiest of the oligarchs in Ukraine.

He owns, or perhaps better stated has significant sway across large sectors of the Ukrainian economy – those spheres of the economy commonly described as “captured”.  Mines, metals, telecoms, alternative energy etc., etc.

This notwithstanding his political sponsorship of political parties (historically Party of Regions, now a part funder of Oppo Block and also a funder of the Radical Party) and numerous individual politicians across almost all party lines.

Little attention is paid to his affairs outside Ukraine – rarely are his assets beyond Ukrainian borders mentioned (unless they are being frozen/arrested by foreign jurisdictions such as his penthouse in London).  Yet Mr Alhmetov, via SCM and a host of subservient companies does indeed own industrial and commercial assets outside Ukraine (discounting high value homes).

The best known Akhmetov owned companies are SCM, MetInvest and DTEK, although there are others, some of which are equally significant in their own way.

Naturally he is not the only oligarch (or minigarch, or corrupt bureaucrat) to own, sometimes via smoke and mirrors, sometimes less opaquely, high value assets beyond the territorial borders of Ukraine.

Nevertheless, it sometimes pays to keep a watchful eye upon the commercial expansion of the Ukrainian oligarchy, rather than concentrating upon what is already known regarding assets that they already hold internally and externally of Ukraine.

It is thus interesting to note the Platts SBB Daily Briefing (of 21 May 2018) and rumours of SCM expansion in Galati (Romania), Skopje (Macedonia) and Piombino (Italy).  MetInvest is unsurprisingly the corporate vehicle of choice, as the assets in question fall squarely within its portfolio – for all the assets are steel works.

The assets it is apparently to bid for belong to ArcelorMittal, itself known in Ukraine, as is its “Ukrainian face” Mohammed Zahoor.

It remains to be seen whether Italian company Marcegaglia will jointly bid with MetInvest for these steel works as is the rumour, or whether any joint bid will be limited to the Italian plant, or whether MetInvest will ultimately bid alone.

Naturally Mr Akhmetov knows Mr Zahoor, however it is likely to be the sole decision of the Mittal family in India that will decide the fate of any Akhmetov/MetInvest bids.

With ArcelorMittal having received EU permission to purchase the Ilva plant in Italy (perhaps the largest in Europe) it may well be that the sale of the Romanian, Macedonian and Italian Piombino plant were a requirement of the Ilva purchase – anti-monopoly issues et al.  That said, it may be that these smaller plants are being sold to raise capital for the purchase of Ilva by ArcelorMittal.  Perhaps both.

A reader is also left to ponder the motivation for Mr Akhmetov in bidding for these three steel plants (with or without any Italian partner).

Naturally having assets outside of the jurisdiction of Ukraine is attractive to a degree – but they are not fireproof with regard the reach of Ukraine.

Also such opportunities do not present themselves on a regular basis, thus there will be a natural interest in considering such opportunities when they do present themselves.

However, a reader may also ponder the events surrounding Mariupol and a major MetInvest asset within the city.

There have been several very vocal public protests regarding the emissions from the MetInvest plant in Mariupol.  To reduce those emissions will require significant investment.

This occurs at a time when Mariupol and the Sea of Azov are clearly subject to Kremlin attention now that the Kerch Strait bridge between the annexed Crimea and Russia is open.  It has been built in such a way as to limit the size of the commercial sea fleet passing under it.  That is perhaps problematic to a Mariupol steel producer and exporter if Mariupol port becomes unfeasible and product is forced to travel by rail or road to a Ukrainian seaport further away – for there are obviously additional costs that were once not there.  Those additional costs will ultimately be passed on to the buyer.

Ergo, having lost numerous assets in the occupied Donbas, Mariupol perhaps becoming evermore problematic, there is an obvious attraction to purchasing alternative plants located further west within the European continent.

Something to keep an eye upon.