Russian steel company suspends construction of methanol complex

Russian steel company Severstal has suspended plans to build a US$600 million direct reduced iron (DRI) facility in T&T, citing a drop in profits and weak global demand. Spokeman for the company, Aleksey Mordashov, made the announcement earlier this week just days after another major foreign investor, Saudi Basic Industries Corp (Sabic) and China Petroleum & Chemical Corp (Sinopec), ended negotiations with the T&T government for construction of a $5.3 billion methanol complex in this country.

Severstal, Russia's second biggest steel producer, suffered a loss of $150 million in the fourth quarter of 2012 caused by weak demand and falling prices. At the end of 2012 revenue dropped by 10.8 per cent compared to 2011 to $14.1 billion. Net profit fell almost threefold year-on year to $762 million.

In January 2012, the company entered into a Memorandum of Understanding (MOU) with the National Gas Company of T&T Ltd, National Energy Corporation Ltd., Complejo Metalurgico Dominicano S.A., and Neal & Massy Holdings Ltd to conduct a feasibility study for construction of a facility on the Union Industrial Estate in La Brea.

The facility would have allowed Severstal North America to secure a consistent supply of DRI for its electric arc furnace operation in Columbus, Mississippi. The project would have involved construction of a DRI/Hot Briquetted Iron plant with a nominal capacity of 1.5 million metric tons per year. It was expected to provide 3,500 jobs during construction and 400 permanent jobs. The project was similar to the Essar Steel project that saw significant protests by environmental groups and resulted in the EMA turning down construction approval.