Russian steelmaker PAO Severstal, a world-leading vertically integrated steel and mining company, has established a new unit that will focus on the development of digital businesses.
Sergey Khabarov, previously investment director at Genome Ventures, a human capital development business, will head the new unit, which will be part of Severstal’s business development and corporate venture projects department, headed by Andrey Laptev, director of business development and corporate venture projects at Severstal.
The new unit will focus on developing platform solutions and online products and services (such as market places) for end users of Severstal products. Severstal has already launched several pilots of digital businesses aimed at better understanding its customers and creating additional services and sales channels for its target consumer industries, including construction and building materials.
The company claims it will continue to maintain a cautious approach to investment, with investments in digital businesses initially amounting to several million dollars a year.
According to Mr Laptev, “We are convinced that the future of industry is for those companies that can learn to use innovative business models. Severstal has already developed significant internal expertise in creating services based on digital solutions, for example, our innovative online store. Now we will employ these skills to develop and incubate digital projects within Severstal that can eventually become independent businesses. Our focus will be on digital solutions that are directly related to our industry and those industries that consume our products, such as construction. This will also support the company's marketing strategy.
“We expect that digital projects will offer additional services to Severstal’s clients, and, once these have become full-fledged businesses, will open up additional revenue streams to support Severstal’s ambitious goal of achieving 10-15% EBITDA growth annually.”