Alexander Abramov
Encyclopedia
Alexander Abramov (born 1959) is a former scientist who became an industrial magnate as head of EvrazHolding, Russia's largest steel producer. Beginning in 1998, he has amassed the largest steel and iron empire in Russia, which employs 125,000 people, controls about 22 percent of the country's total steel output and has an annual turnover of $20 billion. Abramov was listed on the Forbes
list of billionaires for 2011 with an estimated net worth of $7.5 billion.
and Vladimir Potanin
, Abramov had neither political leverage nor financial resources to help him benefit from Russia's chaotic privatisation of the 1990s. In recent years Evraz-Holding has emerged as one of the most aggressive vertically integrated business groups in Russia. Its assets include three large steel mills, three coalmines and several ore-enriching plants, as well as a large commercial port, Nakhodka
, in the east of the country.
He graduated from the elite Moscow Institute of Physics and Technology – Russia's answer to the Massachusetts Institute of Technology
. By the age of 31 he was a deputy head of the Institute of High Temperatures, a research base for Russia's space and defence programme. But by 1990 state funding for research institutes dried up, forcing Abramov to go into business. One option was to sell high technologies created by his institute. But he calculated it would take four to eight years to turn a scientific application into a commercial product.
in the Nizhny Tagil
steel mill, while also buying stakes in its rail-producing plant from other shareholders.
While the first wave of Russian oligarchs grabbed whatever assets they could, Mr Abramov acquired them in a much more focused way. He decided to build a monopoly for rail and steel construction products and looked for factories that would give him synergies. The only other big factories making these products were in the industrial region of Kemerovo
, also home to Russia's largest coalmines. Using his old trading contacts with coalmine bosses, Abramov was introduced to Aman Tuleev, populist governor of the region.
The two factories Abramov was interested in were in bankruptcy in 1998. Salaries had not been paid for up to eight months and strikes were breaking out. Tuleev needed good managers. Abramov needed the two factories and soon a deal was made. As a state creditor, Tuleev would help appoint external managers loyal to EvrazHolding to run the steel mills. Abramov would pay salaries and taxes, guarantee jobs and support Tuleev's social projects. This pitched Abramov against Alfa Group
, one of the most influential oligarch
groups, which controlled one of the factories. While groups such as Alfa were shedding non-core assets, Mr Abramov and his like were building empires. In June 2005 EvrazHolding was listed on the London Stock Exchange
. Five months later, Abramov resigned as group president but remains a member of the board.
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
list of billionaires for 2011 with an estimated net worth of $7.5 billion.
Career
EvrazHolding is a product of Russia's growth since the 1998 financial crisis and Abramov is representative of the second wave of Russian magnates who went into business after the best assets had been taken. Unlike the first wave of politically connected oligarchs, such as Mikhail KhodorkovskyMikhail Khodorkovsky
Mikhail Borisovich Khodorkovsky is a Russian prisoner, considered by some - such as Amnesty International - to have been imprisoned for political reasons, jailed until 2016 and a former Russian oligarch and businessman...
and Vladimir Potanin
Vladimir Potanin
Vladimir Olegovich Potanin is a Russian businessman and oligarch. His partner has been for many years Mikhail Prokhorov...
, Abramov had neither political leverage nor financial resources to help him benefit from Russia's chaotic privatisation of the 1990s. In recent years Evraz-Holding has emerged as one of the most aggressive vertically integrated business groups in Russia. Its assets include three large steel mills, three coalmines and several ore-enriching plants, as well as a large commercial port, Nakhodka
Nakhodka
Nakhodka is a port city in Primorsky Krai, Russia, situated on the Trudny Peninsula jutting into the Nakhodka Bay of the Sea of Japan, about east of Vladivostok...
, in the east of the country.
He graduated from the elite Moscow Institute of Physics and Technology – Russia's answer to the Massachusetts Institute of Technology
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
. By the age of 31 he was a deputy head of the Institute of High Temperatures, a research base for Russia's space and defence programme. But by 1990 state funding for research institutes dried up, forcing Abramov to go into business. One option was to sell high technologies created by his institute. But he calculated it would take four to eight years to turn a scientific application into a commercial product.
Commercial Entrepreneurship
He used his contacts with Russia's steel mills, which used high-temperature technologies, and offered his services not as a scientist but as a metal trader. Trading was a popular and quick way to make money in Russia in the early 1990s. The economy was shrinking, non-payment was a chronic problem and any offer of cash from a trader was welcomed by factories. By 1997, trading was less profitable and many trading companies, including Abramov's, were owed large sums by producers. Abramov began buying factories and swapped debt for equityDebt restructuring
Debt restructuring is a process that allows a private or public company – or a sovereign entity – facing cash flow problems and financial distress, to reduce and renegotiate its delinquent debts in order to improve or restore liquidity and rehabilitate so that it can continue its...
in the Nizhny Tagil
Nizhny Tagil
Nizhny Tagil is a city in Sverdlovsk Oblast, Russia, situated east of the virtual border between Europe and Asia. Population: -History:...
steel mill, while also buying stakes in its rail-producing plant from other shareholders.
While the first wave of Russian oligarchs grabbed whatever assets they could, Mr Abramov acquired them in a much more focused way. He decided to build a monopoly for rail and steel construction products and looked for factories that would give him synergies. The only other big factories making these products were in the industrial region of Kemerovo
Kemerovo
Kemerovo is an industrial city in Russia, situated on the Tom River, east-northeast of Novosibirsk. It is the administrative center of Kemerovo Oblast, located in the major coal mining region of the Kuznetsk Basin...
, also home to Russia's largest coalmines. Using his old trading contacts with coalmine bosses, Abramov was introduced to Aman Tuleev, populist governor of the region.
The two factories Abramov was interested in were in bankruptcy in 1998. Salaries had not been paid for up to eight months and strikes were breaking out. Tuleev needed good managers. Abramov needed the two factories and soon a deal was made. As a state creditor, Tuleev would help appoint external managers loyal to EvrazHolding to run the steel mills. Abramov would pay salaries and taxes, guarantee jobs and support Tuleev's social projects. This pitched Abramov against Alfa Group
Alfa Group
Alfa Group Consortium is one of Russia's largest privately owned investment groups, with interests in oil and gas, commercial and investment banking, asset management, insurance, retail trade, telecommunications, water utilities and special situation investments...
, one of the most influential oligarch
Oligarchy
Oligarchy is a form of power structure in which power effectively rests with an elite class distinguished by royalty, wealth, family ties, commercial, and/or military legitimacy...
groups, which controlled one of the factories. While groups such as Alfa were shedding non-core assets, Mr Abramov and his like were building empires. In June 2005 EvrazHolding was listed on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
. Five months later, Abramov resigned as group president but remains a member of the board.