ROMANIA-RUSSIA Strategic Russian investments in Romania

• "Mechel" has 7,000 employees in Romania

Russian group "Mechel" entered the Romanian market in 2002 and currently owns the plants Mechel Câmpia Turzii (INSI), Mechel Târgovişte (COS), Ductil Steel Otelu Rosu, Ductil Steel Buzău, Laminorul Brăila and Mechel Reparaţii Târgovişte. In Romania, "Mechel" has approximately 7,000 employees.

In October last year, the Romanian authorities met with officials of "Mechel". The discussions revolved around the possibility of "Mechel" participating in projects to develop joint ventures which would build and operate energy generation units in Romania.

The "Mechel" metallurgic group is one of the most important makers of steel and metallurgic products in the Russian Federation and the most important in Romania in those fields. The company's businesses include four segments: mining, metallurgy, ferrous alloys and electricity.

The Tchelyabinsk Metallurgical Plants (Mechel) have acquired the Special Steel Plant of Târgovişte in the year 2002, Industria Sârmei Câmpia Turzii in 2003 and Ductil Steel Buzău in 2007.

The parent company, OAO "Mechel", which is owned by billionaire Igor Ziuzin, is listed on the New York Stock Exchange. The Romanian plants were acquired through "Conares Trading", which operated on behalf of the "Mechel" group.

In a meeting with the CEO of "Mechel" in summer last year, president Traian Băsescu expressed his satisfaction at the fact that the "Mechel" has continued to invest in Romania even during the crisis.

• "Alro" - the largest aluminum maker in Central and Eastern Europe

With an output of 288,000 metric tons of primary aluminum in 2008, "Alro" SA is the largest aluminum maker in Central and Eastern Europe (except for Russia). The company is part of the international industrial and investment group "Vimetco" N.V., which operates in the aluminum industry.

The primary aluminum production facilities are located in Slatina and comprise an electrolysis section, processing facilities, cold and hot steel rolling mills and a department of extruded components. The company also owns the aluminum 0xide plant "Alum" SA of Tulcea.

The customers of "Alro" SA are end users and retailers of metals from Romania and from all over the world. Over 80% of the output of "Alro" is sold on the international markets through the London Metal and based on direct long term contracts with customers from 25 countries all over the world. Countries in the European Union (Italy, Greece, Austria, Hungary etc.), as well as Turkey, the Balkan countries and the United States of America are the main markets for the products of "Alro".

Last year, "Alro" reported a preliminary turnover of 2.24 billion lei, up from 1.81 billion lei in 2010. The net preliminary profit for 2011 increased to 230 million lei, from 159.78 million lei in 2010, due to favorable market conditions.

"Vimetco", the majority shareholder of the company, announced that it wants to become energy independent in Romania. At the end of 2011, "Vimetco Power România" completed the first stage of the call for bids from the general contractors for its own thermoelectric plant in Tulcea. The project for a cogeneration thermoelectric plant of 250 MW in "Alum" Tulcea will have financial support from the EBRD and the commercial banks.

In 2002, the Romanian state sold for 11.5 million dollars a stake of 10% of the shares of "Alro" to investor "Marco Group", which already owned (directly and indirectly) 41.85%. In 2006, "Alro" merged with "Alprom" Slatina and "Alum" Tulcea. In April 2007, "Marco" Group changed its name to "Vimetco". Following the successive share capital increases, "Vimetco" has come to own over 87% of the shares of "Alro".

"Vimetco" is owned by Russian billionaire Vitalyi Matschitsky.

• TMK - a strong presence in Romania

TMK is a company specializing in the production of laminated and welded steel pipes, being the world's second largest pipe maker, with a turnover of approximately 3.3 billion dollars. It is a public company registered in the Russian Federation and listed on the stock exchanges of London and Moscow. TMK owns seven metallurgic plants, five in Russia and two in Romania and exports its products all over the world though its own distribution networks.

In Romania, TMK owns two metallurgic plants, namely TMK Artrom SA Slatina - a maker of mechanical laminated pipes and the company which coordinates the European operations of TMK, and TMK- Reşiţa - the former Metallurgic Plant of Reşiţa, a company managed by TMK-Artrom.

Set up three decades ago (in 1982) under the name of Întreprinderea de Ţevi Slatina (The Slatina Pipe Plant), and having made its first products in 1988, "TMK-Artrom" operates in the metallurgic industry, the segment of unwelded steel pipes, obtained through hot rolling, and is currently an important manufacturer of mechanical pipes intended for the automotive industry and the production of hydraulic cylinders and equipment. Since 2001, the German company "Sinara Handel" (today "TMK Europe") became the majority shareholder of the Slatina-based plant. Starting in 2006, TMK Europe and "Artrom" Slatina became part of TMK, and the Romanian company changed its name to the current one, of "TMK Artrom" S.A., which fulfills the role of coordinator of the Romanian operations of TMK.

Billionaire Dmitri Pumpyansky, the owner of TMK, recently announced that the group wants to invest 300 million dollars a year until 2020 in all the countries where it is present, to maintain its assets and to develop new products.

• "Metalimportexport", an important player in the export of commodities

During the communist period, the activity of "Metalimportexport" was mostly focused on exports, which saw an unprecedented growth. The highest growth was reached between 1988-1989, when the total value of exports was about 2 billion dollars/year, the equivalent of almost 3 million tons of laminated steel and 120,000 tons of laminated and blocks of aluminum.

After 1990, the traditional imports of laminated products and special steels, as well as the imports of non-ferrous material diminished visibly, with some of them disappearing completely, due to the specific conditions arising in the Romanian economy (the contraction in the industrial activity, the lack of funds, the reorganization and restructuring of the industry, the appearance of numerous importers etc.).

Under these circumstances, "Metalimportexport" has refocused its activity towards the import of commodities and raw materials needed by the metallurgic industry. In June 2007, two Russian individual investors, acquired over 50% of the shares of "Metalexportimport" from several shareholders, which allowed the two to become majority shareholders. According to the estimates, they paid approximately 1.6 million Euros for 51% of the shares.

• "Alor" Oradea, the only Romanian company where the Russians called it quits

In the 1990s, alumina maker Alor Oradea was acquired by Russki Aluminium, controlled by Roman Abramovici and Oleg Deripaska. The company operated for just a few years and it was then shut down, due to claims that its assets were being disassembled and stolen under the very noses of policemen.

• "Aurul" Baia Mare, an investment project of 100 million Euros

Mikhail Prokhorov bought the gold reprocessing plant "Aurul" Baia Mare. He intends to begin gold mining using the cyanide-based method. The method is controversial, especially in Romania, after the same plant caused an environmental disaster in 2000. After that accident, the plant remained shut. However, Prokhorov announced he would invest 100 million Euros.

Polyus Gold, the largest producer of gold in Europe (the corporation of Russian billionaire Mikhail Prokhorov) obtained control of the Romanian gold after it bought KazakhGold Group Limited (which owns 25% of the mining industry of Kazakhstan). This also granted him control of the subsidiary of Baia Mare - Romaltyn Mining, formerly the Aurul plant, later renamed to Transgold.

• CET Giurgiu, the most recent Russian acquisition on the Romanian market

The block of shares owned by the state, through the County Council, in the Thermoelectric Plant (CET) Giurgiu was fully sold to Global International 2000, indirectly controlled by Russian investors, in exchange for 21.7 million lei, and the buyer will take on the plant's debts of more than 88 million lei.

Global International 2000 is controlled by Global Energy Investment SRL, led by Boris Golovin, who, according to the press, represents the interests of Russian businesspeople Oleg Deripaska and Igor Zyuzin in Romania.

• Plans for the revitalization of "Rafo"

In 2006, "Balkan Petroleum", the company owned by Marian Iancu, sold the majority stake in "Rafo" to "Petrochemical Holding", a company owned by Iakov Goldovsky.

In 2009, the government expressed its availability to grant a state guarantee of 330 million Euros for "Rafo" Oneşti, in order to achieve the investment plan and to achieve a new petrochemical chain Rafo - Oltchim - Arpechim. At the time, Emil Boc said: "This measure will help rescue 1,500 - 2000 jobs and will contribute to the creation of a petrochemical chain which is extremely important for the Romanian economy and industry".

• TISE, interested in Oltchim

At the end of 2011, Russian company TISE expressed its interest in acquiring the majority stake in Oltchim Râmnicu Vâlcea which the Romanian state intends to sell. On that occasion, the representatives of TISE expressed their willingness to buy the plant of Oltchim and to continue the investments, for retooling.

TISE is a company which produces and invests in energy, controlled by the Russian state, created in 2003 in Moscow. Its shareholders include Tehnopromexport, Zarubejneft and Zarubejneftegaz.

• "Luxoft" joined Romania by acquiring "ICT Networks"

Luxoft is a company operating in the business of IT services outsourcing. The company, which was set up in 2000, is headquartered in Moscow and has development centers in Sankt Petersburg, Omsk, Krakow, Kyiv, Odessa, Dnepropetrovsk, Ho Chi Min, Welwyn Garden City (Great Britain) and Bucharest. The company has branches in New York, London, Frankfurt, Seattle and Singapore.

"Luxoft" describes itself as an emerging global leader in the development of high quality software with engineering DNA". Some of the areas it includes are the aerospace industry, the automotive industry, the energy industry, the financial banking-industry, telecommunications and e-commerce.

The company's list of customers includes "Boeing", "Deutsche Bank", "Citi", "UBS", "AMD", "Dell", "HP", "IBM", "Alstom", "Bosch", "New York Media", which publishes New York Magazine, as well as the US Department of Energy. To the latter, the company provided professional reconversion programs intended for former nuclear engineers looking to work in the development and testing of software products.

"Luxoft" is led by Dmitri Loschinin, who holds the positions of president and executive director. Loschinin, who has an expertise of over 20 years in the business, has previously worked for several IT companies, including "IBM".

In Romania, "Luxoft" has been present since 2008, the year when it completed the acquisition of the local company "ICT Networks". The latter was created in 2000 by Doru Mardare, who currently leads the telecommunications solutions development team of "Luxoft".