The Italian company that helps provide steel for Russian war machine

Following Russia’s annexation of Crimea and the outbreak of the Donbas war in 2014, the Italian Danieli Group expanded to become a major participant in the Russian steel sector, the engine of Putin’s war machine.

Danieli, which distributes and services steel plant equipment, has subsequently collaborated with at least 14 Russian metal enterprises, six of which support Russia’s military industry.

Danieli failed to leave Russian market after Russia invaded Ukraine

Danieli did not abandon the Russian market when Russia launched a full-scale invasion of Ukraine in February 2022 and has since provided equipment to at least one Russian steel factory, according to the Dutch investigative publication Follow the Money.

Severstal and Magnitogorsk Iron and Steel Works (MMK), the owners of which are subject to international sanctions, could be among Danieli’s presumed clients that make steel for Russian weaponry.

The steel sector powers the Russian military-industrial complex. Russian steel production capacity had become obsolete by the end of the Cold War, and foreign businesses moved in to update it. Danieli Group was one such business.

Since the Russian invasion of Ukraine in 2014, the Danieli Group has successfully served as the first link in the chain of Russian military manufacturing through its operations for Severstal and others.

The large-scale Russian invasion of Ukraine in 2022 provided no cause for the Danieli Group to discontinue operations promptly. Half a year ago, the corporation stated that it would leave Russia but did not specify when or how. Danieli may be indirectly assisting Russia’s war effort by taking his time to exit.

“Follow the Money” traced Danieli’s Russian client base

By utilizing Russian import data, openly accessible press releases, papers in Russian and Italian media outlets, interviews, and internal Danieli documentation obtained by journalists, Follow the Money and the Kyiv Independent traced Danieli’s Russian client base.

A shocking rumor rumbled the offices of Danieli Corus, a Dutch subsidiary of the Italian Danieli Group, a few weeks into Russia’s all-out war on Ukraine in early 2022, saying that the company would meet with officials of a large Russian steel manufacturer, Severstal, to explore how to continue doing business.

Several employees questioned whether their company should continue doing business with Russia, which had recently invaded Ukraine, according to a Danieli Corus employee who spoke on the condition of anonymity. And yet, a joint investigation by Follow the Money sheds light on the situation.

Danieli Corus provided furnace cooling components to Russian steel plant

Danieli Corus provided a furnace cooling component to Russia in a probable violation of sanctions, which drew the attention of Dutch law enforcement agencies.

A year into the war, the Italian Danieli Group, which comprises Danieli Corus, announced its intention to withdraw from Russia. It hasn’t happened in the six months since the pledge.

While the organization has been publicly conducting business with Russian clients for years, our study discloses their scope and demonstrates how these long-standing relationships have aided Russia’s military since 2014, when Russia initially invaded Ukraine.

The media reported that Danieli Group and its Russian branch failed to respond to Follow The Money’s request for comment.

Italian Danieli Group – international player in steel plant development

The Italian Danieli Group is an international player in steel plant development and renovation. The company supplies and operates machinery, constructs new furnaces, and provides continuous support to clients, including servicing, repairs, and after-sales. And Russia is its biggest market.

Since 2014, the company has supplied at least 14 Russian metal enterprises, the majority of which are large steel manufacturers and processors.

Danieli has maintained contacts with the Russian steel industry since the Soviet era, but in 2014, the business took this relationship to the next level by establishing its own subsidiary in Russia, Danieli Volga.

Danieli Volga – Danieli’s subsidiary in Russia

Since the establishment of its Russian subsidiary, the Danieli Group has grown to become a prominent participant in the Russian steel technology sector.

In 2021, Italia Oggi, an Italian publication, declared the corporation a leader in the Russian Federation’s steel market, signaling the end of German dominance in the field of Russian steel.

The amount of tenders won by Danieli in the Russian steel technology market—over 90% in 2019, according to Antonello Colussi, head of Danieli Volga—demonstrates the company’s close relations to Russia.

Danieli Volga is headquartered in Moscow, but it is also well-positioned regionally, having service locations in towns around Russia that house significant Russian industrial production sites. Severstal is one of them.

Severstal – Danieli’s key client

Severstal has its steel plant in the town of Cherepovets, around 500 kilometers north of Moscow. The firm is one of Danieli’s key clients and a vocal backer of Russia’s military machine.

According to the company’s leadership statements, Severstal specializes in the production of rolled metal products for the military-industrial complex and has several technical breakthroughs required for the modernization of the country’s armed forces.

Severstal-produced products are used in Russian weapons

In its war against Ukraine, Russia has extensively used steel-made weapons created by Danieli clients. The VOG-25 cluster grenade is one example.

Danieli’s client, Magnitogorsk Iron and Steel Works, supplies the steel for the grenade, according to the Russian investigative journalism outlet Proekt. When the grenade explodes, tiny bomblets and steel casing shards fly to a fatal range of up to six meters.

The AK-100 Kalashnikov machine gun is another sort of weapon that employs steel from Danieli’s clients. Proekt reports that the construction of the AK-100 Kalashnikov machine gun utilizes Severstal steel.

Russian soldiers who captured Bucha in the spring of 2022 most likely used these rifles to abuse and kill Ukrainian civilians who lived there, according to the media.

MMK and Severstal’s products help produce Russian Kalibr cruise missiles

Proekt discovered that Danieli’s clients, MMK and Severstal, are also involved in the development of Russia’s Kalibr cruise missiles, which Russia launches to strike Ukrainian cities and energy infrastructure.

According to the report, Kalibr’s manufacturer purchases rolled steel from MMK. Severstal and MMK supply hull steel for the construction and servicing of Kalibr carriers, submarines, and surface boats at the shipyards in the Black Sea.

Danieli listed as an “international sponsor of war” in Ukraine

Ukraine’s Defense Ministry openly condemned Danieli’s collaboration with Russian clients in June 2022. “Supporting Russia’s military-industrial complex violates both legal and moral considerations,” the Ministry stated on social media.

According to trade data from the Import Genius database, Danieli’s Dutch subsidiary, Danieli Corus, transported the cooling element to Severstal’s blast furnace two months later, on August 10, 2022.

By the time Danieli Corus was delivered, Severstal’s owner, Alexei Mordashov, had already faced sanctions from the EU. Since 2022, the United States has sanctioned Severstal, and since May 2023, the United Kingdom has also imposed sanctions on the company. But the EU had yet to punish Severstal itself.

Late in September 2022, Ukraine designated Danieli as an “international sponsor of war.” Danieli responded to the allegations about half a year later, calling them “baseless and inaccurate” in a March 2023 press release.

The company publicly denies the charges, but according to Danieli’s internal paperwork and many employees who spoke on the condition of anonymity, most staff realize that doing business with Russia is an issue.

According to those familiar with the company, it intentionally took risks and continued doing business with its Russian subsidiaries, the owners of which are subject to EU sanctions.

Danieli’s Russian clients linked to military industry

Steelmaker Krasny Oktyabr is one of the Russian enterprises that Danieli Group supposedly continued to deal with after the war broke out in 2022. Krasny Oktyabr declared in April 2022 that it would continue collaborating with Danieli.

According to Russian media, the company is one of Russia’s leading makers of special steel for military uses and supplies steel for the armor of some tanks. Krasny Oktyabr also manufactures steel for nuclear reactor vessels used in Russian submarines.

Dmitry Pumpyansky, the company’s owner, has been on the EU and US sanctions lists since March 2022. According to Proekt, the fines compelled him to transfer ownership of his businesses on paper.

After the start of Russia’s full-scale invasion, the international community imposed penalties on Viktor Rashnikov, the owner of MMK, as well as on the owners of Severstal and Krasny Oktyabr.

According to an unknown Danieli Corus employee, the company “took an informed risk” in supplying the cooling element to Severstal.

Severstal and MMK under international sanctions

By December 2022, Danieli had internally designated Severstal and MMK, among others, as sanctioned by the EU and the US, despite targeting only the firms’ owners and not the corporations themselves. The leaked partner list, dated December 19, 2022, and exchanged within the company via email, reveals this information.

Authorities eventually became aware of the company’s dealings with Russia.

According to individuals with knowledge of the event, the competent authorities paid a visit to Danieli Corus in October 2023, just over a month after Follow the Money approached the Dutch Foreign Ministry with queries on the situation. According to them, officials from the Netherlands monitoring the export of illegal products came in to discuss the company’s relationship with Severstal.

Danieli announced its exit from Russia but has yet to accomplish it

After more than a year of Russia’s full-scale invasion of Ukraine, Danieli eventually caved in and announced its exit from the Russian market.

“The development of geopolitical scenarios has made us realize that commercial relations and presence in the Russian market are no longer possible in the current situation,” Danieli CEO Gianpietro Benedetti said in April 2023. “For this reason, we have decided to sell our business located in this region.”

Danieli has yet to reveal clear plans for the sale of its Russian operations, more than six months after making the announcement.

The corporation also failed to clarify why it initially announced its plan to leave Russia in April 2023, more than a year into an all-out war, despite the early sanctions imposed on several of its key Russian customers in February–March 2022.

Supporting Russia’s war machine means helping Russian invaders kill more people in Ukraine and bringing the war to Europe.

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