By Matt Whittaker / NewsBreak Denver
(Pueblo, Colo.) A European steel company backed by a sanctioned Russian billionaire is selling its steel mill in Pueblo amid tensions over the war in Ukraine. So far the company hasn’t let the city know if any potential buyers are interested.
Evraz, a steel producer and mining company headquartered in London but with core operations in Russia, announced Aug. 10 that it was selling its North American operations, which include production sites in Oregon and Canada, as well as the mill in Pueblo that employs more than 1,000 people.
“So far, we haven’t been informed of the buyers who may be interested in the purchase of Evraz,” said Haley Sue Robinson, public affairs director for the city.
An Evraz North America representative didn’t respond to requests for an update on the process. The parent company previously said it doesn’t intend to provide additional information unless the sale is finalized.
It wouldn’t be unusual for the city not to be notified as the divestiture process is still in the early days, and companies often keep details of such transactions secret while negotiations continue.
Buyers would want to go through a process called due diligence to determine how much a company might be worth. That can include getting legal opinions about whether government regulators might bar the deal because of antitrust rules or whether there might be environmental liabilities the buyer would have to clean up or employee issues that would have to be dealt with.
A normal divestiture might take two to six months to complete depending on the company’s relationship with the buyer, says Andrew Lopez, founding partner with Greenwood Village-based business law firm Sequoia Legal, which works in divestitures and international commercial transactions.
Evraz said the sale would allow it to “unlock the stand-alone value of the North America business.”
Although the Chicago-based North American subsidiary operates independently from its United Kingdom-headquartered parent company, the operations in the United States and Canada still lie in the political shadow of its multinational head.
“The news of Evraz North America selling its North American operations to include Pueblo comes as a bit of a surprise, but with the ongoing war in Ukraine and the potential ties to Russia it is understandable,” said Pueblo Mayor Nick Gradisar.
The United Kingdom sanctioned Evraz in May but gave a special license allowing its North American business to continue operating. The UK also sanctioned Roman Abramovich, the Russian billionaire who as of February owned nearly 30% of Evraz and according to the UK has effective control of the company and a close relationship with Russian President Vladimir Putin. The European Union and Canada have also sanctioned Abramovich, who is often referred to as an oligarch because of his wealth and political influence.
According to the UK sanctions list, Evraz was potentially supplying steel that may have been used in the production of Russian tanks, an accusation the company denies.
“Suggestions about potential use of Evraz’s steel, vanadium and other products for military purposes indicate not only the misunderstanding of steel industry’s base principles, but the lack of knowledge about Evraz’s product range as well,” the company said. Evraz also said it doesn’t consider itself at the direction of Abramovich.
The Pueblo facility, which began producing rail under the Colorado Fuel and Iron Company ownership in 1881, has more than 1,000 employees and is the largest producer of rail in North America. It manufactures pipe for the energy sector as well as wire rod and coiled reinforcing bar for the construction and automotive industries.
It’s also been a leader in the energy transition from fossil fuels as the world’s first steel mill to run almost entirely on solar energy. Evraz North America is also building a new facility to manufacture long rails in Pueblo.
“Whoever owns it in the future will have a huge asset as a premiere steel mill in North America,” Gradisar said. “We know the investments with the long rail plans for the future and the best steel workers in North America here in Pueblo make this an attractive investment for a company looking to make this acquisition.”