Steel maker Evraz could feel ripple effects of sanctions
The Canadian operations of Evraz PLC, a steel company whose largest shareholder, Roman Abramovich, has been added to Canada's list of individuals sanctioned in response to Russia's invasion of Ukraine, are continuing as usual for now.
But industry watchers say the association with the Russian oligarch and ongoing uncertainty around Canada's sanctions regime may be enough to cause skittishness among its customers and suppliers.
Abramovich was one of five individuals newly sanctioned by Canada on Friday. Officials also said they were barring 32 Russian companies and government entities from receiving defence equipment or supplies from Canada.
“The sanctions on Russian officials and oligarchs like Abramovich are directed at them so that they cannot profit or benefit from economic activities in Canada or the hard work of Canadians working in companies that they have investments in,” Prime Minister Justin Trudeau said. “We are obviously going to watch carefully but we are confident that this will not impact the hard-working Canadians who are doing good work in companies across the country.”
Ari Pandes, an associate professor of finance at the University of Calgary's Haskayne School of Business, said that while there appears to be no immediate implication in Canada, the “fluid” situation could nevertheless hurt the steel maker's business. “There is certainly turmoil,” he said. “This type of uncertainty can bring about further losses as customers, suppliers, etc., grow anxious.”
Among the wild cards is whether sanctions will be extended to other Evraz owners, and whether assets could yet be frozen, seized and sold.
“I believe other oligarchs also have shares, so that adds another layer of risk,” Pandes said.
Abramovich owns a 28.64-percent stake in Evraz PLC, the parent company, whose London-listed shares were suspended from trading earlier this week.
On Friday, the board of the steel and coal mining business, whose operations are largely based in Russia, resigned.
Evraz North America, which operates as a wholly owned subsidiary, has operations in Oregon and Colorado, as well as Camrose and Red Deer, Alta., and Regina. The company has about 1,800 employees in Canada, and has provided about 58 per cent of the pipe used in the Trans Mountain pipeline expansion project in Western Canada. Initial estimates in 2017 were that the Regina-based Evraz operation would contribute 75 per cent of the pipe needed.
While Abramovich's assets have been frozen in the U.K, the governments of Alberta and Saskatchewan are keen to keep the operations running here.
Scott Moe, the premier of Saskatchewan, said in a statement Friday that his government has been in contact with the feds “to ensure there are no local impacts to operations or employment at the Evraz Regina site” as a result of the new sanctions against Abramovich.
“We have been assured these sanctions will not negatively impact the mill, and we will continue to engage with the federal government to ensure that continues to be the case,” Moe said.
Alberta Premier Jason Kenney's press secretary Justin Brattinga said Kenney's position remains that individuals, rather than companies, should be subject to sanctions and asset freezes.
“Freezing the assets of one minority shareholder would not require freezing and seizing Evraz's assets and for the company to cease operation,” Brattinga said.
But a former government official says the decision to sanction individuals does not go far enough. Thomas A. Lukaszuk, a former deputy premier of Alberta, said Friday that the provinces should be doing more.
“What needs to happen now, at provincial levels, is an immediate (barring) of procurement of any products sourced from oligarch-owned companies,” he said.