Russian University of Economics named after G. V. Plekhanov (Moscow, Russia):

N. A. Kazakova, Dr. Econ., Prof.
A. E. Sivkova, Senior Lecturer

National Research Nuclear University MEPhI (Moscow, Russia):
V. G. Kogdenko, Dr. Econ., Associate Prof.

Transport and Telecommunication Institute (Riga, Latvia):
I. Kuzmina-Merlino, Dr. Econ., Prof.

E-mail (common): axd_audit@mail.ru

The study is aimed at assessing and forecasting the economic sustainability of Russian metallurgical companies based on Harvard branch analysis methods adapted to the industry. The proposed methodology includes two stages: identifying trends and key risk factors for industry sustainability based on the analysis of major companies activities; adjustment of forecasts of economic sustainability for individual metallurgical companies based on the risk-based approach. At the first stage, the results of the study revealed both positive and negative factors affecting the economic stability of companies in the metallurgical industry. Among the positive processes, it should be noted: the increase in the exports share of the metallurgical industry (14%), the decrease in depreciation of fixed assets to 40%, the increase in the digitalization of business processes, the increase in the operational efficiency and financial activity of major companies, the reduction in the number of bankruptcies and liquidation of businesses. To understand industry trends, the analysis of the largest companies has been carried out, which indicates positive trends in cost management, circulating capital and asset utilization. Industry analysis made it possible to identify key risk factors for reducing investment activity and economic stability: environmental security risk, high political risk due to economic sanctions, uncertainty in world markets and, as a result, high volatility of demand and prices for products and raw materials, insuffi cient capacity utilization; strategic risks of investments in energy and resource-saving technologies and industrial safety; risks of aggressive dividend policy. The second stage of the analysis was to update forecasts of the economic sustainability of individual metallurgical companies, not belonging to the largest ones, but included in the group of public, socially significant for specific territories or single-industry towns from the position of importance in their socio-economic development, having a unique specialization of activity and therefore priority in attracting investment. Interpretation of the obtained results proved their comparability with calculations based on the known discriminant models. At the same time, the assessment turned out to be more unequivocal and refi ned, which is essential for the substantiation of investment objects, the development of regional investment programs, including the development of medium and small businesses. The novelty of the author’s approach consists in integrating the methods used in industry and microeconomic studies to assess the economic sustainability of socially significant metallurgical companies, highlighting new enlarged areas of industry research, as well as developing the new risk-based approach to substantiate indicators and their signifi cance in a point-rating evaluation system.

1. Mining and metallurgical enterprises 2013–2019. Industry Overview of the INFOLine News Agency. [electronic resource] Available at: http://infoline.spb.ru (accessed: 6.03.2020).
2. Echterling F., Eierle B., Ketterer S. A review of the literature on methods of computing the implied cost of capital. International Review of Financial Analysis. 2015. Vol. 42. pp. 235–252.
3. Federal State Statistic Service [electronic resource] Available at: https://www.gks.ru/folder/11186 (accessed: 5.03.2020).
4. Demographic indicators of enterprises by type of economic activity [electronic resource] Available at: https://www.gks.ru/folder/14036 (accessed: 05.03.2020).
5. Deloitte — a review of the iron and steel industry [electronic resource] Available at: https://www2.deloitte.com/ru/ru/pages/about-deloitte/deloitte-in-press/2017/obzor-rynka-chernoj-metallurgii.html# (accessed: 05.03.2020).
6. Gendon А. L., Kazakova N. А., Khlevnaya Е. А., Sedova N. V. Prediction of development in the mining and chemical industry in Russia and in the world. Gornyi Zhurnal. 2017. No. 4. pp. 49–52.
7. Damodaran А. Strategic Risk Taking: A Framework for Risk Management. Moscow: Williams. 495 p.
8. Mordashov А. How Industry 4.0 Changes Management [electronic resource] Available at: https://hbr-russia.ru/liderstvo/lidery/a24981 (accessed: 5.03.2020).
9. Kazakova N., Gendon A., Sedova N., Khlevnaya E. Estimation of factors and projected growth of the metallurgical branch of Russia under unstable market conditions. Metalurgija. 2018. Vol. 57. No. 4. pp. 360–362.
10. Global Reporting Initiative (GRI) [electronic resource] Available at: https://www.globalreporting.org/Pages/default.aspx/ (accessed: 05.03.2020).
11. Vorobyov А. G., Tsirulnikov Е. V. On activities of international organizations in the field of analysis of the global iron ore market. Gornyi Zhurnal. 2003. No. 11. pp. 84.
12. Bain J. Relation of Profit Rate to Industry Concentration. Quarterly Journal of Economics. 1951. Vol. 65. pp. 293–324.
13. Interfax. SPARK International Information Group. [electronic resource]. Available at: http://www.spark-interfax.ru/ (accessed: 05.03.2020).
14. Dluhošová D., Ptáčková B., Richtarová D. Financial performance evaluation of metallurgy of the Czech Republic. METAL, 27^th International Conference on Metallurgy and Materials, Conference Proceedings. 2018. pp. 2055–2061.
15. Yong He, Nuo Liao, Jiwen Rao, Feifei Fu, Zhihao Chen. The optimization of investment strategy for resource utilization and energy conservation in iron mines based on Monte Carlo and intelligent computation. Journal of Cleaner Production. 2019. Vol. 232. P. 672–691.
16. Christmann P. Towards a More Equitable Use of Mineral Resources. Natural Resources Research. 2018. Vol. 27. No. 2. pp. 159–177.
17. Neingo P. N., Tholana T. Trends in productivity in the South African gold mining industry. The Journal of the Southern African Institute of Mining and Metallurgy. 2016. Vol. 116. pp. 283–290.
18. Official website of JSC Severstal [electronic resource] Available at: https://www.severstal.com/rus/ir/disclosure/financial_reports/ (accessed: 6.3.2020).
19. Kijewska A. Conditions for sustainable growth (SGR) for companies from metallurgy and mining sector in Poland. Metalurgija. 2016. Vol. 55, Iss. 1. pp. 139–142.

20. Elmira Tajvidi Asr, Reza Kakaie, Mohammad Ataei, Mohammad Reza Tavakoli Mohammadi. A review of studies on sustainable development in mining life cycle. Journal of Cleaner Production. 2019. Vol. 229. pp. 213–231.
21. The Center for Macroeconomic Analysis and Short-term Forecasting
(CMASF) [electronic resource] Available at: http://www.forecast.ru/_ARCHIVE/Analitics/PROM/2018/Bnkrpc-3-18b.pdf (accessed : 6.03.2020).
22. Kerkhoff H. J. Iron and steel industry: rising uncertainty. Chernye Metally. 2018. No. 5. pp. 61–65.
23. JSC Kosaya Gora Iron Works [electronic resource] Available at: http://www.kmz-tula.ru/investor.html (accessed: 6.03.2020).
24. JSC Revda Non-Ferrous Metal Processing Works [electronic resource] Available at: http://e-disclosure.ru/portal/files.aspx?id=5517&type=3 (accessed: 6.03.2020).
25. JSC Dmitrov Experimental Plant of Aluminum and Combined Band [electronic resource] Available at: http://www.e-disclosure.ru/portal/files.aspx?id=842&type=3 (accessed: 6.03.2020).
26. Ryabkov I. L., Yashalova N. N. Economic security of the steel industry in conditions of the anti-dumping duties usage. Chernye Metally. 2019. No. 2. pp. 66–73.
27. Filobokova L. Yu., Prokopyeva А. Conceptual substantiation of the basic model for development of ferrous metallurgy in the Russian Federation. Gosudarstvennyi Sovetnik. 2019. No. 3 (27). pp. 34–41.