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Eastern Europe
June 7, 2019 www.intellinews.com I Page 17
Russian steel tycoon Mordashov splits up sanctioned machinery business
Russian steel tycoon Alexei Mordashov will
split his sanctioned machinery and engineering business Silovie Mashini (Power Machines) into four entities, with part of the assets transferred
to a holding headed by him personally, Reuters reported on May 31 citing Sevegroup consolidating Mordashov's assets.
Power Machines will be split into four divisions: large-scale generation, small and medium generation, heat equipment, and electric equipment. Reportedly, the decision to split the assets is not related to the sanctions, sources close to the company said. Since 2018, Power Machines (Silovie Machini) of Mordashov and Tekhnopromexport have been under US sanctions.
Recent reports claimed that being under sanctions could hurt Power Machines chances for participating in the state programme of supporting gas turbine production, with localised Siemens turbines being more likely to profit from state support.
A subsidiary of Gazprom - GEH or GazpromEnegroHolding – has squeezed out sanctioned Mordashov and formed a new domestic joint venture with Siemens, according to reports. The timing of new partnership with the state giant came just ahead of the announcement on the state support programme, and did not seem accidental.
Power Machines is Russia's main producer of equip- ment for heat-, atomic-, and hydropower plants, with orders of over $5.4bn as of end of 2017 and share on Russia and CIS market of over 70%. However, when it comes to gas turbines, there is no competitive domestic alternative to turbines supplied by Sie- mens. Currently 50% of Russia's electric energy
is being generated at gas power stations.
In April Russia launched two heat power plants in the annexed Crimea. The power plants
are controlled by Tehnopromexport agency, a subsidiary of Rostec, which was embroiled in the sanction-busting scandal cantered on gas turbines from engineering major Siemens being supplied to the sanctioned peninsula.
Low demand for meat in Russia likely to hurt output in 2019
Russia's meat output growth in 2019 could be the slowest in a decade due to oversaturation of the domestic market and declining real disposable in- come, Kommersant daily reported on June 3 citing the presentation of Sovekon analytical centre.
As local producers helped by counter-sanctions banning food imports managed to squeeze out imports almost completely (imports of meat decline by 37% in 2018 to 0.4mn tonnes), they are pushing against structural limits.
The growth of output of poultry and meat is expected to amount to only 0.5% to 15mn tonnes, s compared to 2.5% in 2018, 4.4% in 2017, 3.7% in 2016, 4.3% in 2015, and 3.7% in 2014.
In the poultry and pork segment, Russian produc- ers are filling almost all of domestic market, and in the conditions of slow demand would have to cut prices. However, possible opening up of mar- kets in Asia and Middle East could possibly boost export by 40%, providing support.