OREANDA-NEWS. OAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading steel and steel-related mining companies, has launched a project on building a new coating shop at Cherepovets site. The total investments in the project will exceed 6 billion RUB.

The coating shop will comprise a hot dip galvanizing line with 400 K tons annual production capacity and a color coating line producing 200 K tons per year. Share of production of new HDGL will be used as a feed for a new CCL.

Sergey Toropov, Chief Executive Officer, Severstal Russian Steel division commented: "We believe this project to be our priority both from strategic and economical points of view. With this project we shall increase the production of high margin color coated products instead of lower margin cold rolled products. The project completion will allow Severstal to increase its share in the Russian color coated products market".

According to Mr. Toropov, the project will be given a fast track. "We are ready for this. This project is characterized by a high level of elaboration in all aspects. In particular, the site for new facilities was chosen with account of required infrastructure which also meets our construction schedule", the head of Severstal Russian Steel said.

As division CEO believes, one of the most important tasks for Severstal is to substitute import coming to Russia in big amounts but often of poor quality. Another benefit of import substitution is development and promotion of our brand products, including also Steel Silk and Steel Velvet products which will be produced also at new facilities.

"This project will contribute to leveling out the current misbalance between supply and demand in domestic market also due to adoption of a new product - color coated steel for white goods", said Sergey Toropov.