All is fair in steel and war: Italian equipment used in making military armor continues to be supplied to Russia, 7 December 2024

...Heavy metal is crucial for the Kremlin. Exports of iron and steel — which totaled $20 billion in 2022 — help fund the state budget, and domestically, these products are used to make weapons and military vehicles...

Before the war, one of the key facilitators for Russian metallurgists seeking to obtain state-of-the-art equipment was the Italian company Danieli. Among its Russian clients are Severstal and MMK — the Magnitogorsk Iron and Steel Works. Up to 30% of Danieli's pre-war revenue came from Russia.

Not only did the Italian company supply Russia with ready-to-use products from abroad, it also ran a fully localized equipment production facility in Dzerzhinsk, Nizhny Novgorod Region. In 2020, the then-director of the company, Antonello Colussi, who had previously spent 10 years working in China, expressed his pride in the company’s relationship with Russia.

Danieli technology is indispensable in many applications. Thus, the Taganrog Metallurgical Plant uses the Danieli out-of-furnace steel treatment unit to produce pipes with increased cold and corrosion resistance. Danieli rolling mills form the core of long product rolling at Magnitogorsk Iron and Steel Works, where the Italians overhauled this production line in the mid-2000s. Just before the full-scale war began, Danieli undertook to build four heating furnaces for the rolling mill at the Magnitogorsk steelworks. The contract was signed in the presence of an Italian diplomat...

Danieli's announcement of its intention to exit the Russian market came only in the spring of 2023. Company employee Giovanni Siri told The Insider that “the Russian market is currently dormant for Danieli.” However, Danieli's financial documents say otherwise.

In 2023, the company's Russian subsidiary, OOO Danieli Volga, increased its revenue only by a factor of 2.6, according to Spark-Interfax. However, the overall net balance of its financial flows increased by 36 times, from $789,000 to $28.4 million...

In 2023, according to Russian customs data, Danieli Volga imported into Russia $6.5 million worth of equipment parts and spares, including $3 million worth of parts produced by Danieli's facilities. The Italian company's Chinese subsidiary, Danieli Metallurgical Equipment and Service, tops the list of suppliers.

In 2024, Danieli Volga imported $4 million worth of equipment parts and spare parts, including $600,000 from Danieli Group companies, including the Austrian subsidiary Danieli Engineering and Services. A significant portion of the imported goods fall under the EU embargo — which is why they were imported via China...

Danieli provided an official response to The Insider’s request for comment. In the company’s words, written to us in English:

“The Russian market is currently dormant for Danieli caused by the effect of the huge sanction limitation and null financial support by the whole international banks.

Please consider that before starting the conflict we had huge contracts in place with Severstal and MMK which have been duly stopped and cancelled causing Millions of loss to Danieli.

The same Danieli Volga was managing certain local contracts with Russian steel producers which have been duly stopped and canceled causing several litigations in front of the Russian jurisdiction Court causing impacting financial damages to the company.

OOO Danieli Volga currently operates with a very limited cash flow and reported a loss in the last financial period 2023-24 and there is no expectation for a better result in the current period 2024-25...

The two directors of Danieli Volga operate in the interest of Danieli Volga itself with the obligation to follow the sanction limitation as issued by UE then applicable to the Danieli Group...

Please consider that none of Danieli Volga customers are subject to UE sanction and/or are considered crucial for the military sectors in everywhere.”