China breathes life into Russian industry as Western firms retreat
Bloomberg notes that Chinese companies and technologies have become saviors of Russia's steel industry. It highlights how facilities such as plants, smelters, and steelworks, once beacons of Russian industry, now heavily rely on support from China, given Russia's economy's dependency on the military sector and its growing need for iron and steel.
Jan 28, 2024 | updated: 4:43 AM EST, March 7, 2024
Magnitogorsk, an emblem of Soviet industrial might, is home to a new coke plant constructed by the Chinese state-owned company Sinosteel Engineering & Technology Co.
Bloomberg draws attention to a deal worth 75 billion rubles (equivalent to $840 million) between China and Magnitogorsk Iron & Steel Works PJSC before Russia invaded Ukraine. Despite the timing, this deal symbolizes the increasing solidarity between China and Russia.
But Magnitogorsk is just a single case in point. Following the invasion of Kojów, Russian factories faced serious difficulties when Western corporations withdrew their cooperation, equipment, and access to contemporary technology.
China to the Rescue
Chinese suppliers provided relief by expediting equipment deliveries and supplying a cadre of specialized workers, including engineers and, most importantly, technology.
Bloomberg also points out that Russian mining company MMC Norilsk Nickel PJSC, the country's largest mining firm in the Urals, sought Chinese assistance in curbing sulfur dioxide emissions after European contractors withdrew in 2022 and could not continue their project. Steelmaker Severstal PJSC also inked a contract worth nearly $1 billion with a Chinese supplier for its ore processing plant.
Indeed, the increase in Russian orders has spurred significant foreign market growth for leading Chinese companies like Metallurgical Corp. of China Ltd. and Sinosteel Engineering & Technology Co.
Contracts for these companies included constructing a production line for aluminum giant United Co. Rusal International PJSC. Sinosteel Engineering & Technology Co. also aims to expand its market share in Russia and neighboring countries.
Bloomberg quotes Alexander Gabuev, Director of the Carnegie Russia Eurasia Center, who admits, "China has a wide range of equipment. In most cases, it’s on par with or more innovative than other offerings.” He underscores that Chinese equipment is currently essential for Russia, as they have no other alternatives available.
