By Ambrose Evans-Pritchard (Filed: 20/06/2006)

Roman Abramovich, the émigré tycoon and owner of Chelsea Football Club, is to plunge back into Russia with the purchase of a $3.12bn (£1.7bn) stake in the steel company Evraz.

Russia's richest man, Mr Abramovich pulled out of the country last year after liquidating all of his holdings, including his majority stake in Sibneft, which he sold to the Russian state energy group Gazprom for $13bn.

His unexpected return has set off fevered speculation in Moscow that the move is a first step towards the creation of a global-scale steel giant, orchestrated for strategic reasons by Russian president Vladimir Putin.

Mr Putin has taken a close interest in a parallel move by the Russian steel producer Severstal to join forces with Arcelor. That merger has been described as both a spoiling tactic to upset Mittal Steel's bid for Arcelor and, by some, as a disguised Russian takeover of Europe's biggest steel group. It gives Severstal's owner, Alexei Mordashov, a strategic veto.

Millhouse Capital, Mr Abramovich's investment vehicle, said it had agreed to buy a 42pc stake in Evraz at a price of $21.50 a share, enough to ensure a dominant say on management decisions.

The deal lifted the shares of Corus by 5¾ to 383¼p on reports that the Anglo-Dutch steel group could be the next target, but a source close to Mr Abramovich yesterday denied the rumours, saying: "We have never been looking at Corus. We are interested in Evraz because it is a well-run company with a potential for increasing profits."

Evraz is Russia's second-biggest steel company with profits of $905m on revenues of $6.5bn and a highly competitive cost base producing low-end slab steel. Preliminary talks earlier this year on a tie-up with Corus broke down after Evraz balked over Corus's modest profits.

Vladimir Katunin, a metals analyst at Aton Capital in Moscow, said it was possible that Mr Abramovich was acting as a stalking horse for the Kremlin, perhaps in a strategic drive to extend political control over the steel sector. He said: "He is close to Putin so he may have been asked to do this as a way of transferring the shares to the state. We've already seen that the government is buying assets back from the oligarchs in energy and mining: steel could be next."

Abramovich buys into Russian steel

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