The story of Pueblo’s steel mill is steeped in the lore of American industry, from its rise backed by ingenuity and perseverance to its near demise at the hands of foreign competition.
The mill has risen again in recent years, modernizing operations and winning back business from overseas rivals — with the help of its Russian ownership.
That last detail may have been largely unknown, or at least overlooked, by most Coloradans. The mill was purchased in 2007 by Evraz Plc, one of Russia’s largest steel and mining companies.
But on Feb. 25 Russia invaded Ukraine.
Now, one of Pueblo’s biggest employers is under scrutiny as the United States and NATO countries impose sanctions on Russian companies, officials and oligarchs. Evraz’ stock prices sank 90% on the London Stock Exchange and as of last week trading was suspended.
The London headquartered company reported a 45% rise in profits in 2021 and paid its largest shareholder, Roman Abramovich, a $450 million dividend. Abramovich, who gained his billions through the privatization of state-owned Russian companies and has close links to Russian President Vladimir Putin, is better known as the owner of the United Kingdom’s Chelsea soccer club.
The U.K. seized a private jet that belonged to Abramovich last week and on Thursday, froze his assets, leading to the resignation of the Evraz board. Evraz also canceled a dividend that, based on Abramovich’s 29% stake in the company, would have paid him about $210 million on March 30. Canada, which has four Evraz operations, sanctioned him Friday, according to Reuters’ sanctions tracker.
Abramovich’s yacht slipped out of a Spanish port to an unknown destination, but is likely to be reported by Russian yacht trackers on Twitter.
Major American hedge funds have been advised to freeze Abramovich’s investments and as he is believed to be a major source of cash for the Russian government, he is expected to be included in a new round of sanctions by the EU on Monday.
As of Friday, Evraz itself had not been sanctioned.
Despite the international upheaval and intrigue of tracking Russia’s richest people, the Pueblo steel mill has rebounded in a way that’s good for the local economy and the environment.
In December, the Bighorn Solar project began powering the energy-sucking electric arc furnace that replaced the plant’s belching blast furnaces. The 1,800-acre field with 750,000 solar panels makes the mill the largest solar-powered steel production facility in the world. It was a joint project with Lightsource BP, Xcel Energy and Evraz.
The furnace turns thousands of tons of scrap metal into new steel rails and pipes, and a $500 million project for a mill to build the longer rails that railroads want is underway.
“It’s such a great project of putting all the pieces together,” said Jeff Shaw, president and CEO of the Pueblo Economic Development Corp. “I believe it’s a model for manufacturing elsewhere.”
About 1,300 American workers are recycling scrap and using renewable energy to make steel products for American railroads and oil and gas and automotive companies. It is precisely the kind of make-it-in-America, green-energy-using company touted as what’s needed to bolster the U.S. economy and aid in the fight against climate change and provide energy independence.
Yet, it’s well entwined in global intrigue.
A globalized world
As Russian bombs and missiles fell on Ukrainian cities, a critical spotlight revealed how entangled the global economy is. As investors, retirement funds and universities sought to divest from Russian interests, former heads of state and former Colorado Gov. Bill Owens turned up on a list of board members for Russian banks and financial institutions under scrutiny by the U.S. treasury and NATO countries.
Colorado’s links that rose to public view included two multimillion-dollar homes in Snowmass owned by Abramovich since 2008 and another purchased that year by Russian billionaire Eugene Shvidler, and the $76.3 million sale of an acre of land at the base of Aspen mountain earlier this month to Russian interests, as well as the ownership of Evraz North America, which has two sites in the United States and four in Canada.
In Pueblo, it has so far been “business as usual,” said Eric Ludwig, president of United Steelworkers Local 2102, which represents production and maintenance workers at Evraz Rocky Mountain Steel. While the workers keep up with what’s going on in the war in Ukraine, they don’t identify as working for a Russian company, he said.
“In the entire community of Pueblo there’s not one person I know of who says they work for Evraz,” Ludwig said. “We work at the mill. Or Rocky Mountain Steel or even CF&I. It doesn’t matter who’s paying the bills as long as our checks don’t bounce.”
Ludwig and Shaw, though, were keenly aware that Abramovich had seemed to distance himself from Putin by vowing to sell the Chelsea soccer club and donate the proceeds to victims of the war in Ukraine. Eight days after he put Chelsea on the market, his assets, including the team, were frozen by U.K. sanctions.
Shaw said he has no insights as to what the turmoil of the war and economic sanctions might bode for Evraz or the Pueblo plant, but he did note that he was optimistic because the mill provides products needed in the United States. And it’s a strong employer, paying its workers well above average Pueblo wages.
Evraz did not return phone and email messages seeking comment. The company has posted news releases on its website, including one titled “Update on certain matters.” In that notice posted on March 9, the company distanced itself from Abramovich and two other shareholders — the three control 48% of Evraz’s voting shares — and detailed how it is complying with U.K. sanctions.
Shaw said he hopes the Russian ownership doesn’t tarnish the image of the mill because it is doing good things for Pueblo and for the environment.
That includes a $91.6 million bond-funded environmental cleanup of the site where the new mill is being built, according to the Pueblo Urban Renewal Authority. The bonds were sold late last year to fund the cleanup and will be repaid through taxes collected from Evraz in future years.
Still, the public involvement had some people seeking assurance last week that bond money could not be diverted to Russia’s war effort, according to the Pueblo Chieftain. PURA Executive Director Jerry Pacheco assured those raising questions that it could not.
The issue of a marred reputation or one that raises questions in the community, however, is one that John Holcomb, professor emeritus at the University of Denver’s Daniels College of Business, said should not be underestimated.
The fact that hundreds of companies have gotten ahead of official sanctions and are refusing to deal with Russia has been gratifying to see, he said.
“There’s been a general uprising of anti-Russian spirit globally.”
That could mean at least a short-term publicity crisis for companies such as Evraz, even if their stock recovers sufficiently to keep the company running.
“There’s going to be collateral damage,” he said. “This company and the Russian ownership will be dealing with the stigma.
“However you slice the pie here, they’ve got a real, real problem,” he said. “And it’s not one due to sanctions, it is the public uprising against Russia.”
Crisis risk assessment
In a world of multinational companies, an international crisis such as what’s happening in Ukraine can wreak havoc. That’s especially true if companies have not done social/political/legal risk assessment, Holcomb said.
And most haven’t.
Holcomb believes globalization has been good for most companies and countries, but there are risks and the war in Ukraine is showing some of them clearly.
“The crisis can’t be prevented — it’s upon them,” he said. if there is a political crisis, business owners are “caught in the crosshairs” of their home country and the countries that host pieces of their operations.
The Russian oligarchs have much to lose either way, he said, because standing up to Putin is not a viable option.
It’s possible that Evraz could split off its North American holdings, but the owners still would have to choose between countries, he said.
Crises aren’t new to steel mill workers in Pueblo — or elsewhere. Over the decades they’ve weathered strikes and bankruptcies and sales to new owners.
The mill’s story really is cyclical. It was founded by railroad magnate Gen. William Palmer and partners and purchased by wealthy industrialist John D. Rockefeller Jr. when a cash infusion was needed. It ran on the labor of immigrants from all over the world who “helped build the American West,” a designation it still proudly proclaims on its website. More than 40 languages were spoken at the mill within a few years of its 1881 opening.
There were acquisitions and expansion, unionization and strikes. Then, the Colorado Fuel and Iron Company CF&I was hit hard in the 1980s by foreign competition and declared bankruptcy in 1990.
What remained was bought by the Oregon Steel Company and it became the Rocky Mountain Steel Mill, a much smaller version of its former self.
That’s what Evraz bought in 2007, and has revived over the ensuing years.
The workers believe they’ll still be working “at the mill” and building rails and pipes that American companies need just as they always have, regardless of ownership.
UPDATE: This story was updated at 11:41 a.m. on March 14, 2022, to better describe the status of the Chelsea football club.