The UK government has placed sanctions on Evraz, the multinational steelmaker part-owned by the billionaire Roman Abramovich that was formerly counted among Britain’s biggest companies.
The Foreign Office said on Thursday that Evraz “operates in sectors of strategic significance to the government of Russia” and the action would “further chip away at Putin’s financial reserves and siege economy, and support Ukraine’s continued resistance”.
Evraz’s registered office is in London’s Mayfair district, but it has vast mining and steelmaking operations in Russia, with more than 70,000 employees.
The UK and allies including the US and EU have used sanctions on Russian companies and businessmen as one of the main tools to respond to the invasion of Ukraine.
The Evraz measure is thought to be the first time a former FTSE 100 member has been subject to sanctions. It completes the fall from grace of a company that was valued at more than £5bn as recently as January.
Its membership of the index meant that shares in the company were held by a wide variety of investors managing money for pensions, including BlackRock, Schroders Investment Management, Vanguard and Legal & General.
Evraz shares were suspended from trading on the London Stock Exchange in March after the UK government highlighted its alleged strategic significance to Russia when imposing sanctions on Abramovich, who owns a 29% stake in the company. Its board also resigned after the sanctions against Abramovich.
The government had in Abramovich’s sanctions designation alleged that Evraz was “potentially supplying steel to the Russian military which may have been used in the production of tanks”. This charge, which was strenuously denied by Evraz, was not included in the company’s sanctions designation on Thursday.
In a statement in March, Evraz said it did not expect the company itself to be hit with sanctions because Abramovich did not have “effective control”. It also denied that its steel was used to build Russian tanks, saying it provided steel only to the “infrastructure and construction sectors”.
However, Evraz signed a five-year deal in 2012 to supply railway wheels and “metal” to UralVagonZavod, a Russian company that is the world’s largest manufacturer of battle tanks and which makes T-72s and T-90s, both in service in Ukraine today. A person with knowledge of the contracts said they contained provisions limiting them to civilian use only.
An Evraz spokesperson said: “Evraz in Russia supplies long steel to infrastructure and construction sectors for civilian use only.”
In its announcement on Thursday, the Foreign Office said: “Evraz plc produce 28% of all Russian railway wheels and 97% of rail tracks in Russia. This is of vital significance as Russia uses rail to move key military supplies and troops to the frontline in Ukraine.”
It added that the new sanctions would “further deter companies operating in strategic sectors in Russia”.
The sanctions include an asset freeze, meaning no UK citizen or company can do business with the firm. However, UK sanctions guidance suggests that companies subject to sanctions are usually allowed to pay employees and cover other “basic needs” such as rent, utilities or property management costs.
