Alexander Abramov - Commercial Entrepreneurship

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 equity 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.