May 25, 2018 / 1:04 PM / 25 days ago

Russian sanctions-hit Power Machines likely to withdraw from JV with Siemens - Mordashov

ST PETERSBURG, May 25 (Reuters) - Russian power equipment producer, Power Machines, which was hit by the U.S. sanctions in 2018, will most probably withdraw from its Russian joint venture (JV) with Germany’s Siemens, its owner Alexei Mordashov said.

Washington blacklisted Power Machines when it updated the list of companies and officials related to supplies of German turbines to Crimea, the peninsula annexed by Moscow in 2014.

Power Machines is a Russian partner in Siemens Gas Turbine Technologies LLC, a St Petersburg-based joint venture in which Siemens has a majority stake.

“The reason for sanctions was the supply of gas turbines manufactured by this JV to Russian state-owned company Rostec who redirected them to Crimea,” Mordashov told Reuters on the sidelines of the St Petersburg economic forum.

“But in this JV we have 35 percent and Siemens has 65 percent, and the management of the JV is fully controlled by Siemens. It is Siemens’ technology, Siemens’ turbines, Siemens’ design… But the (U.S.) Department of State has no problem about Siemens, nothing to even the JV but everything is against Power Machines which has no executive power in this JV.”

“We have to review seriously our participation in this JV. It does not create a lot of benefits to us and it creates a lot of problems. Most probably we will have to review it substantially and withdraw from the JV,” he said.

Mordashov is ranked by Forbes magazine as Russia’s second richest businessman with a wealth of $18.7 billion. He controls one of Russia’s largest steel makers Severstal and owns assets in other industries.

In April, he asked the Russian government to support Power Machines, which, he said, can help the government create technology to start producing gas turbines with large capacity.

“We never asked for funding or subsidies and we are not asking for any types of subsidies in this case. What we are asking for is very simple - because free market conditions for Power Machines were substantially undermined by the sanctions, we are asking the government to help us to restore the level playing field,” he said.

Speaking about the steel market for the second half of 2018, he said he expected robust demand. Mordashov said he agrees with a World Steel Association forecast which sees 2018 global steel consumption rising by 1.8-2 percent. (Reporting by Polina Devitt and Christian Lowe Additional reporting Anastasia Lyrchikova Editing by Elaine Hardcastle)

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