Acquisitive energy and mining firms are looking for deals in the European and North American markets, writes Conor Sweeneyin Moscow
Russia's oligarchs are diving into European and American investments as they seek to go global.
The €2 billion purchase of a US steel business this week by a firm controlled by Roman Abramovich - better known for his ownership of Chelsea Football Club - marks the latest in a sudden batch of multibillion-dollar foreign deals masterminded by the country's new rich.
The diversification has also seen a number of other high-profile mergers and IPOs, all within the past few months.
Recent examples include the recent public offering in London by Severstal, which netted its main owner, Alexei Mordashov, nearly €1 billion in exchange for just under 10 per cent of his steel firm.
Ireland has also been touched, with the Aughinish Alumina plant now effectively under Russian ownership after a three-way merger of aluminium firms, two of which were Russian. That deal, announced last month, is still awaiting regulatory approval.
Apart from oil and gas, Russia's buoyant economy has been underpinned by the booming commodities sector, particularly for metals like aluminium and steel.
Analysts suggest the move abroad mirrors both the desire of Russia's president Vladimir Putin to build national champions that can compete on a global scale, and also the wish by at least some of the richest people in his country to spread their bets westward.
While the Russian state hasn't shown the same zeal towards taking over the assets of other oligarchs as it did to Mikhail Khodorkovsky's massive Yukos oil business, some may be glancing over their shoulders.
Khodorkovsky is now serving nine years in a Siberian penal colony for tax offences while most of his business has been sold off to Kremlin-linked firms. His mistake, at least in the view of foreign observers, was to finance politicians opposed to Putin's rule.
But it's not just the oligarchs who are looking beyond Russia's borders. In keeping with the Russian government's strategic plans, the massive state-controlled Gazprom has also been seeking to buy assets of gas distribution utilities in both Britain and Germany - though it has met a hostile response amid fears that Russia will control not just the fuel but the pipes taking it to factories and homes across Europe.
The European Union and others remain concerned about Russian control of energy supplies.
Earlier this year, Russia cut off gas supplies to Ukraine, a move that prompted energy shortages in several EU states. And while the EU and Russia have agreed on the necessity of avoiding politicisation of the energy issue, Russia has also recently blocked European energy firms from developing lucrative energy supplies in Russia.
EU energy commissioner Andris Piebalgs has warned that Gazprom's monopoly on natural gas production and exports could hinder its chances of gaining access to European retail markets.
Mr Piebalgs reaffirmed the call for Russia to open up access to its natural gas pipeline transport system, and called for greater transparency.
In the oligarchs' latest swoop this week, workers for Oregon Steel Mills discovered its board was supporting an agreed takeover. With plants in Oregon, Colorado and Alberta, Canada, Oregon Steel workers will now be employees of Evraz, Russia's top steel-producer, where Roman Abramovich controls 41 per cent of the stock.
Evraz hopes to use the American firm as a springboard to export steel to North America for use in the American pipe business. Listed in London, Evraz already owns some of the largest plants in Russia together with sites in both Italy and the Czech Republic.
According to Moscow-based independent Russian energy analyst Leonid Grigoriev, much of the boom in the Russian metals industries can be closely linked to the country's cheap domestic prices for oil and gas, where costs are far lower than in western Europe.
"Since aluminium, in particular, uses vast quantities of electricity in the production process, Russia has effectively been exporting its gas and oil in the form of metals," the president of the Institute for Energy and Finance told The Irish Times this week.
And, although the Russian media this week questioned the benefits of the country's anticipated membership of the World Trade Organisation, Severstal's Alexei Mordashov came out strongly in its favour.
Articulate in both English and German as well as his native Russian, Mordashov's firm now has around 90,000 employees dotted across Europe and North America.
He's just turned 40 and is a multibillionaire, with some estimates putting his worth at around €8.5 billion.
Although Severstal failed to beat Mittal in the battle for European steel group Arcelor earlier this summer, there are now rumours he will make a bid for the Anglo-Dutch Corus group.
The third major consolidation just under way is in the aluminium business, where an even younger man, Oleg Deripaska (38), now controls a vast conglomerate producing 16 per cent of alumina in the world.
Last month, his firm, Rusal, merged with a smaller Russian player, Sual, and the Swiss-based Glencore to create the new United Company Rusal, with turnover of around €10 billion per year. Among the assets now under its control is the Aughinish Alumina plant in Limerick, which was owned by Glencore.
Although European countries currently account for around for 70 per cent of foreign direct investment in Russia, the recent reversal in the investment trend suggests that, before long, many more assets in Ireland and other EU countries could be under Russian ownership:
