The Russian steel and mining company Evraz PLC has announced it plans to sell its North American assets, which include a steel plant in Regina that employs 1,200 people.
The U.K.-based company said Wednesday in a news release on its website it is “launching the process of soliciting proposals for the acquisition of its North American subsidiaries.”
It said doing so would “unlock the stand-alone value of North American business.”
Following Russia’s invasion of Ukraine in March, the United Kingdom and Canada sanctioned Roman Abramovich, the Russian oligarch who holds a 28 per cent ownership stake in Evraz.
In May, the U.K. government sanctioned Evraz PLC.
Evraz North America is headquartered in Chicago, Ill., and has Canadian operations in Regina and Alberta. It has said it is a subsidiary and operates independently of Evraz PLC.
“The possible transaction will be subject to regulatory and corporate approvals and applicable sanctions laws, and will require approval from relevant sanctions authorities,” the Evraz PLC statement reads. “Evraz does not intend to provide any additional information on this process unless or until the process is finalized.”
The Saskatchewan government provided a statement to CBC after Evraz announced its intentions to sell.
“The province is committed to working with any potential buyers and expects that any sale would have minimal impact on operations or employees,” the statement says.
In June, Evraz North America said the company had laid off 170 employees since May, with 50 to 75 more layoffs expected in the coming months.
Michael Yeats, a senior vice-president within Evraz North America, said in June the layoffs are due to the company idling its large-diameter pipe fabrication work.
“It’s a very cyclical business and it is very project-based. In fact, all of 2021 that operation was idled and we weren’t doing anything there,” Yeats said.
Big questions remain
Robert Huish, an associate professor, department of international development studies at Dalhousie University, says the potential sale leaves questions about where the profits will go and how the future of the workers will be affected.
“It’s hard to find good news if you are working for Evraz and your job is on the line here,” Huish said Wednesday. “I think the biggest vote of confidence that anyone is looking for would be some sort of job security to make sure that people are not going to be turfed out as a result of these sales and the politics behind them.”
Once the sanctions were announced, Huish says, an eventual sale of North American assets was likely to follow.
“The sanctions were effective enough that the company had to make an adjustment to its assets,” he said. “And this is really a knock on consequence of trying to go after Roman Abramovich’s assets. And by extension, this sanctions regime is impacting Evraz in Saskatchewan.”
He says it is not clear what might happen to any profit from sales.
“The big question is if any assets are sold during this time, will they make their way back to Abramovich’s connections in Russia or will it be held at lower levels in North America and elsewhere.”
As far as potential buyers go, Huish says a Canadian company might not be a likely match, and pointed to investors in the United States , Brazil or another market where steel demand is high.
“The biggest market for it and the one place that has none of it is China, still,” Huish said. “So if there was any sort of rewarming of trade relations between China and Canada we could see potential for someone to buy that property.”