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| Home » EMEA » Russia
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| Increasing efficiency with debt restructuring |
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Russia’s mining and metals sector is currently facing difficulties caused by falling commodities prices and demand. However, the main issue facing the industry is ability of companies – especially those overleveraged – to restructure their debt and work together with banks to find mutually beneficial solutions.
Focus on the effectiveness of business processes and cost reduction is becoming vital. Companies with economies of scale, a higher proportion of variable costs and a more diversified business will be better off in 2009 in terms of maintaining their economics. Most Russian companies will be able to sustain strong cost competitiveness due to the ability to secure raw materials from the domestic market at cheaper prices and lower mining costs compared to other countries. Moreover, destocking and the Russian government's stimulus package should have a positive influence on gradual recovery of production volumes.
There are also likely to be mergers and acquisitions – in particular among small to medium tier players – as it would allow better diversification in both products and countries. The performance of the Russian economy, as well as economies of countries such as Brazil, India, and crucially China, will have major implications for the mining and metal sector, as they have been responsible for much of the demand growth over the past few years.
SMBC group has very strong connections and worldwide expertise in the mining, metals, and steel industry.
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| Structured Finance > Energy & Natural Resources |
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