A steel company says it has lost a third of its sales after its Russian oligarch owner was sanctioned

• Alexei Mordashov, Russia's third-richest person, was sanctioned by the EU in February.
• He controls steel giant Severstal, which said it lost around a third of its sales following the sanctions.

The steel company owned by Russian oligarch Alexei Mordashov has confirmed it has lost a third of its sales a month after it was sanctioned.

The confirmation by a spokesperson from the company, Severstal, follows previous reports on the fate of the company.

The company had said in early March that it was "experiencing some difficulties in relations with its EU clients" and was instead redirecting volumes to other markets. "The company's financial position remains strong and its debt level is low," it said at the time.

But Mishanina told The Journal that the company is at risk of a debt default, even though it has funds available.

Alexei Mordashov is Russia's third-richest person, with a net worth of around $23.1 billion, according to the Bloomberg Billionaires Index. Mordashov controls private investment company Severgroup, which owns Severstal, a Russian steel and mining giant. Mordashov has a 77% stake in Severstal.

By sanctioning Mordashov on February 28, the EU had cut off around a third of Severstal's sales, Anastasia Mishanina, a spokesperson for the company, told Insider. The company sells around 11 million tons of steel every year, with between 3 and 3.5 million going to EU countries, she said.

"We are now in the process of redirecting these volumes to the alternative markets including Middle East, Asia, Africa, and South America," Mishanina told Insider.

The company had said that Citibank had "frozen" a test payment Severstal made on March 16 "due to regulatory investigations." This prevented Severstal from making a $12.6 million interest payment on an $800 million bond, the company said.

Severstal said on Tuesday that even though both the company and Mordashov hadn't been sanctioned by the US, it had asked for a license from the US Office of Foreign Assets Control, which authorizes companies to process payments related to loan participation notes. On Friday, Severstal said it had also applied for the licenses from EU and UK authorities.

After Mordashov was sanctioned, Western firms, including its London-based PR company, cut ties with Severstal and four directors resigned from its board, The Journal reported.

Since Russia invaded Ukraine in late February, the West has imposed sweeping sanctions on Russian industries, businesses, and individual elites and oligarchs to crush its economy and put pressure on Russian President Vladimir Putin to call off his invasion.

Mordashov has shifted stakes and resigned from boards

The day he was hit by EU sanctions, Mordashov shifted his 34% stake in travel company TUI in two separate transactions and later resigned from its board. The majority went to a British Virgin Islands company believed to be controlled by his wife, but a 4.1% stake went to Severgroup.

Mordashov also stepped down as a director at the mining company Nordgold and transferred control of a $1.1 billion stake to his wife.

The EU accused Mordashov of "supporting actions and policies which undermine the territorial integrity, sovereignty and independence of Ukraine" when it sanctioned him in February.

"I have absolutely nothing to do with the emergence of the current geopolitical tension and I do not understand why the EU has imposed sanctions on me," Mordashov told the Russian news outlet TASS the day after the EU sanctions were announced. He has since been sanctioned by the UK, too, but not by the US.

Some of Mordashov's assets have already been seized under the EU sanctions. Italy has seized a $71 million superyacht belonging to Mordashov, as well as his $116 million property in Sardinia, Reuters reported in early March. A $500 million superyacht thought to belong to Mordashov docked in Russia on Thursday.