Russian steelmaker Severstal suspends Europe sales on sanctions

Russian steelmaker Severstal PJSC suspended sales to Europe, its biggest export market, after billionaire owner Alexei Mordashov was sanctioned, along with other tycoons in the country.

The company, which sells about 3 million tons of steel per year to Europe, is looking at new avenues for sales after being forced to suspend deliveries, a person familiar with situation said, asking not to be identified as the information is private. 

Severstal’s global despositary receipts fell 14% as of 2:49 p.m. in London trading, after slumping 68% on Monday. Share trading in Moscow has been halted since Monday. Severstal declined to comment.

The European Union imposed sanctions on Mordashov and other wealthy Russians as the bloc ratchets up penalties on Moscow following the invasion of Ukraine. The sanctions will tighten the European steel market, where prices rallied to a record last year, dealing another blow to industries already facing soaring energy bills.

Mordashov, 56, is the second-richest Russian, according to Bloomberg Billionaires Index. Almost half his fortune comes from his controlling stake in Severstal, which he built into one of the world’s most efficient steelmakers.

“What is happening in Ukraine is a tragedy for two fraternal nations. It is terrible that Ukrainians and Russians are dying, people are suffering hardships and the economy is collapsing,” Mordashov said in the statement on Monday. “I fail to understand how these sanctions against me will contribute to the settlement of the dreadful conflict in Ukraine.”

Alisher Usmanov, another Russian steel tycoon, was also sanctioned but Metalloinvest Holding Co. avoided sanctions because he owns less than 50% of the company.