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.