Russia Steels Market Share

Nearly one year ago, I opened a column on Russia's continued U.S. asset buying spree with the line: "What a difference a millennium makes." Nearly one year later, we've learned that ... one year hasn't made a lot of difference in this story.

Late last week, The Moscow Times carried a Reuters story describing plans by mega-Russian steelmaker Magnitogorsk Iron & Steel Works (MMK) to invest $1 billion building a sheet steel factory in Ohio. If all goes as planned, U.S. regulators are expected to approve construction of the plant by year-end, adding 1.5 million tons of sheet steel destined for the automobile factories of Ford (NYSE: F), GM (NYSE: GM), and Chrysler . And when I say "if all goes as planned," I mean "as planned by Ohio" -- this deal seems a foregone conclusion, as, according to Ohio Lt. Gov. Lee Fisher, Ohio has been "competing" to attract MMK. (I've seen no word yet on how local steelmaker AK Steel (NYSE: AKS) appreciates the state working actively to attract local competition.)

As alluded to above, this is the continuation of a long-term trend of Russian steelmakers setting up shop, or buying up existing shops, stateside -- a wise move in light of the constant pressure from domestic industry to hike tariffs on imported steel. In past stories, we've described how Russia's Severstal beat out U.S. Steel (NYSE: X) to acquire the famed Rouge steelworks in Michigan, then snatched up an interest in Wheeling Pittsburgh 's (Nasdaq: WPSC) coking coal operations. Elsewhere, Russia's Evraz bought out Oregon Steel last year, and Novolipetsk Steel acquired an indirect interest in Winner Steel in Pennsylvania. Moreover, Russia's metals and mining companies aren't confining their interests to steel. For example, nickel-kingpin Norilsk Nickel (OTC BB: NILSY.PK) acquired a sizable stake in U.S. fuel cell pioneer Plug Power (Nasdaq: PLUG) last year.

Meanwhile, back in the Rodina, I couldn't help but notice that no sooner had Gazprom launched its latest attack on a Western interloper (it was ExxonMobil 's (NYSE: XOM) turn to play punching bag this time), than out came Oleg Mitvol, deputy head of the "Federal Service for the Inspection of Natural Resources Use," declaring that Russia is "no longer a Banana Republic." Russia will not allow foreign companies easy access to its natural resources. "Those times are a thing of the past."

Returning to the U.S., and seeing who's buying whom here, I wonder if we can say the same.

© 2007 Universal Press Syndicate.