February 13, 2015. One of the world’s major pipe manufacturers, Pipe Metallurgical Company (TMK) bought a 100% stake in ChermetServisSnabzheniye. The transaction cost the company some 2,73bn RUR. This purchase is not going to affect the capital expenses in 2015; on the contrary, the deal is expected to reduce the CAPEX by over 34% compared with 2014, the company’s press service reports.

ChermetServisSnabzheniye was set up in 2000; it is now one of the largest players on the Russian scrap ferrous metal market and keeps building up on its sales and revenues. ChermetServisSnabzheniye is TMK’s centralized supplier; in addition to collecting, processing, and selling scrap metal, the company is also in charge of maintenance supply.

‘ChermetServisSnabzheniye has been the key scrap metal supplier for our member enterprises for a few years now, so this company joining TMK means we can become fully self-sufficient in terms of scrap metal needs, which, in its turn, gives us raw stuffs security. The acquisition was part of our vertical integration strategy and was intended to improve and increase the reliability of our supply chain, reduce the impact of market uncertainties, cut the SG&A expenses per 1,000 kg of scrap metal we use (and keep its cost at an acceptable level), and consolidate the newly acquired company’s profit,’ says TMK Director-General Alexander Shiryaev.