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Evraz Wants Out of North America

Written by William C. Vantuono, Editor-in-Chief
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Evraz North America steel rail plant, Pueblo, Colo.

London, U.K.-based but Russian-owned Evraz Plc, one of the largest suppliers to North American railroads of rail steel and wheels, is looking to depart North America, including ending its ownership in steel mills in Pueblo, Colo.

Evraz, one of Russia’s largest steel and mining companies, acquired its Pueblo mill, Evraz Rocky Mountain Steel, in 2007. However, following Russia’s invasion of Ukraine in February, the company has come under scrutiny from the U.S. government and NATO due to its ties with Russia, according to an Aug. 10 report by Tamara Chuang in the Colorado Sun. One major Evraz investor is billionaire Russian oligarch Roman Abramovich, who resigned from Evraz’s board in March.

Evraz North America Director, Communications and Government Affairs Annie Stefanec told Railway Age that “the U.S. government has not acted or made any statements about the company that would suggest ‘scrutiny’; [neither has] the North Atlantic Treaty Organization (NATO).” 

On Aug. 10, Evraz said it would solicit “proposals for the acquisition of its North American subsidiaries,” as selling them off would allow it “to unlock the stand-alone value of the North America business.” 

Evraz announced this even as it continued construction on $500 million, solar-powered long-rail mill that would employ 300. The project had also received a tax credit incentive of up to $2.8 million if it added 205 net new jobs over eight years, according to the Colorado Department of Economic Development and International Trade.

“It’s a considerable economic driver for the community,” Jeff Shaw, President and CEO of the Pueblo Economic Development Corp. told the Colorado Sun. “We evaluated Evraz when we did the expansion project, which is an expansion of the rail mill that is under construction right now. The steel mill has been one of the backbones of Pueblo for 100 years. It certainly is not like it was 40 years ago or 50 years ago, but it’s important to Pueblo so much that the community invested a tremendous amount of resources in their expansion. It’s important not just for the resources or what they provide, but most important for the workforce that is out there. All I know really is that they just put it out there that they’ll entertain offers, that there’s no buyer in place. They don’t have anybody identified.”

Evraz Statement on Sale

“Evraz plc announces that it is launching the process of soliciting proposals for the acquisition of its North American subsidiaries (Evraz North America, ‘ENA’ or the ‘Company’). The sale will allow to unlock the stand-alone value of the North America business. 

“The solicitation process is currently being conducted under the Office of Financial Sanctions Implementation (OFSI) General License INT/2022/1710676 and we are in contact with OFSI as part of this process. The possible transaction will be subject to regulatory and corporate approvals and applicable sanctions laws, and will require approval from relevant sanctions authorities, including OFSI.

“Evraz does not intend to provide any additional information on this process unless or until the process is finalized. 

“Evraz North America is a leading, vertically integrated producer of engineered steel products for the North American rail, energy, industrial and construction markets. ENA has steelmaking capacity of 2.3 million tons and finished steel (including tubular products) capacity of 3.5 million tons, and operates 2 EAF-based steel facilities, 4 rolling mills and 8 tubular mills, and 17 scrap recycling facilities. ENA is constructing a state of the art, 320-foot greenfield rail facility that will replace the existing rail mill; project expected to be completed by 2023. Having strong financial results (2021 sales of $2.4 billion and Adjusted EBITDA of $320 million), ENA can provide stable income and cash flow to its new investor. 

“In 2022, Evraz plc did not receive and does not plan to receive any income from the activities of ENA.”

According to rail industry consultant Bob Cantwell, “Two Russian AAR-certified wheel suppliers are Evraz and Vyksa. Evraz is a huge $13 billion steel company with a global presence and revenues of $2.36 billion in North America. Of this total, North American rail component revenues were $392 million in 2021. Most of this revenue comes from the supply of rail, with a small percentage from wheels. Evraz North America, an independent, wholly owned U.S. subsidiary of London, U.K.-based Evraz PL, that employs 1,200 (900 of whom are United Steelworkers), enjoys a 48% market share of steel rail in North America, with its plant in Pueblo, Colo. It should be noted that Evraz does not produce wheels in North America, but includes sales of imported wheels from Russia in its North American revenues. The company says that only a small percentage of its North American revenues comes from its Russian-manufactured wheels. All rail manufacturing takes place in Colorado.”

Further Reading: Rail Wheel Supply: North American Supply Chain is Critical

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