Talking about getting a slice of the metals pie has become fashionable in Russia over the past decade, and now it is more or less clear who owns what. Only now are the players assessing their weight and their potential in the sector. Many of the sought-after assets in the "metals wars" are losing their attractiveness. Rather than being multimillion-dollar cash cows, metals companies are desperate for multimillion-dollar investments.

Theoretically, the process of carving up the sector should have ended when each of the nine large companies – Severstal, ZSMK, NLMK, KMK, Magnitogorsk, NYMK, Mechel, OEMK and NOSTA – found themselves an owner. The only company still looking for an owner is NOSTA, because Avtobank and its ally, oil trader Nafta-Moscow, are fighting to remove Stiltex, their former ally in the fight against the management.

The rest of the companies have already pledged loyalty to this or that feudal lord – owner of a controlling stake or creditor debts. But only a lousy feudal lord doesn't dream of becoming an emperor. The current balance of power in the sector is based on not just the Big Nine companies, but also on the suppliers of raw materials and major consumers.

Various sector players chose different strategies. Severstal's head Alexei Mordashov figured the best way to build the empire was to form contractual alliances. Severstal agreed to defend its partners in the alliance from potential problems by using its political influence (e.g. protecting a state-owned company from privatization), while the partners weren't to flirt with Severstal's competitors.

Viktor Rashnikov, the head of Magnitogorsk steelworks, bet on protection from the authorities and building a vertically integrated company modeled after the giants in the oil sector. Alexander Abramov and Iskander Makhmudov, meanwhile, followed a strategy of horizontal integration and acquisitions of coal companies.

So far, all these strategies have proved worthy. By the middle of this year, up to 80 percent of assets in the metals sector have been united through various means into roughly seven major alliances and empires that set the climate on the market.

Strange though it may seem, the country's major metals alliance – a partnership between the Urals mining and enrichment plant and Evrazholding – hardly seems to exist. But this partnership, built on personal ties between its participants, control up to 40 percent of all assets in the sector and run three of the Big Nine – NTMK, Zapsib and KMK. The alliance makes no secret of its plans to get its hands on a couple more major companies.

Alexander Abramov and Iskander Makhmudov sealed their alliance during the battle for the Kachkanarsky mining and enrichment plant. The idea's author, Sverdlovsk entrepreneur Pavel Fedulov, was one of the most colorful figures of the "bandit capitalism" period. He served time in Sverdlovsk Oblast prison for his brutish methods of resolving a business partner, the buyer of 19 percent of shares in the Ural-Start mining and enrichment plant. Fedulov, who was a major shareholder of Kachkanarsky, intervened in negotiations between Djalol Khaidarov, Kachkanarsky's general director, and Alexander Abramov, who controlled NTMK.

Fedulov realized that if Khaidarov sold his shares to Abramov, his own 19 percent stake lose its value. He decided to team up with Khaidarov's partner Makhmudov, co-owner of UGMK, who soon removed Khaidarov from the company, and then it was Abramov's turn to worry. Instead of mining and enrichment company, for which NTMK was a major consumer, he got an influential and powerful competitor at the steelworks. After Khaidarov helped Evrazholding resolve its conflict with Sverdlovsk Oblast Governor Eduard Rossel, the trilateral union began to grow fast.

The alliance went on to swallow the remains of empire built by Mikhail Zhivilo, a Siberian metals magnate accused of plotting to assassinate Kemerovo Governor Aman Tuleyev. Once it had Zhivilo's KMK and a number of coal companies under control, the alliance became the largest organization on the Russian metals market. Through its common co-owner Makhmudov, the alliance sealed a partnership with Russky Aluminy, the Kovdorsky mining and enrichment plant, Kuznetsky ferro-alloys, Vostisibugol, Chitalugol, MDM-Bank and its parent company MDM Group, which owns the Pipe and Metals company.

The alliance is quite aggressive in its desire to be the most influential player in Russian industry overall. For example, it is showing unambiguous interest in Magnitogorsk steelworks, which has managed to stay independent thanks to its political connections, including the deputy prime minister Viktor Khristenko, governor Pyotr Sumin and presidential representative Pyotr Latyshev, who is in conflict with Governor Rossel and can't stand Makhmudov.

But the image of Makhmudov as the shadow owner of all Russian industry is undoubtedly exaggerated. Serious players on the market regard Makhmudov, a Tashkent native who speaks Arabic, with respect, but without superfluous seriousness. Makhmudov's name comes up whenever assets in any industry are being carved up. In August, the Kommersant daily came up against an unusual situation. During a battle for a small plant in the Sverdlovsk Oblast, both sides in the conflict said they were fighting Makhmudov's people. And the manager of the Lebedinsky mining and enrichment plant, who is in conflict with the local authorities, said that "Makhmudov himself came twice" to the little town where the plant is located. The plant's management surrounded the buildings with Tatra trucks to keep the enemy out, but Makhmudov never turned up.

The Makhmudov factor reached a boiling point when a Moscow-based tabloid seriously debated whether Makhmudov wasn't just a virtual character, or something of a dragon from fairytales for middle management. The wildest version was that Makhmudov is Governor Rossel himself.

The other three metal Goliaths haven't shown any interest in Evrazholding's horizontal integration strategy. They are able to build their own empires. The only thing the owners of NLMK (Vladimir Lisin), Severstal (Alexei Mordashov) and Magnitogorsk steelworks (Viktor Rashnikov) lack is powerful political support.

UGMK-Evrazholding benefits from Makhmudov's close contacts with Roman Abramovich and Rossel, but Lisin and Mordashov have demonstrated the power to appoint the governors personally. For example, Vyacheslav Pozgalyov, the governor of Vologda Oblast where Severstal is located, used to be Severstal's deputy director for social and cultural affairs. But Severstal can't give Pozgalyov more weight as a governor.

Rumors have it that both Lisin and Mordashov have been invited to join the government on several occasions, but have refused. Lisin says he refused because he loathes working in public service, while Mordashov does not bother to explain. Rumors have it he could have traded a controlling stake in Severstal for the post of deputy prime minister, but the millionaire metals boss was obviously not ready for a such a radical career change.

Despite lacking a major political sway, the empires of NLMK, Magnitogorsk and Severstal are quite effective and growing. This year, Severstal unexpectedly acquired assets in the automobile industry, specifically the Zavolzhsky engine plant, which supplies the GAZ and UAZ automobile plants. Most likely, Mordashov was trying to get back at Russky Aluminy and Oleg Deripaska, who already bought GAZ and the Pavlovsky bus plant, and is eyeing the Minsk automobile plant. Russky Aluminy has had no luck in buying the technologically important engine plant from Mordashov.

What's more, Mordashov was able to convince MDM Group's head Sergei Popov that Kovdorsky plant, Severstal's ore supplier wouldn't change its sales policies as soon as MDM buy it. Severstal solved its coal problems easily by lobbying for the Komi coal holdings to be excluded from the list of companies up for privatization. Mordashov became friends with all the influential coal people on the European side of the Urals Mountains. Tuleyev quickly had the coal people on the Siberian side of the Urals making friends with Makhmudov.

Another of Severstal's important acquisitions was the United Steelworks' pipe factories, the Vyksunsky and Chelyabinsk pipe plants. These plants represent a third of the pipe market.

Rashnikov's empire is not as large, and includes only part of the Chelyabinsk Oblast's metals processing plants. Magnitogorsk's main ore supplier, Sokolovo-Sorbaisky mining and enrichment company, is located in Kazakhstan. Magnitogorsk has perfectly friendly relations with its suppliers.

Lisin, who heads NLMK, has also not shown much interest in expanding his business. He seems satisfied with the KMA ore company at the Kursk magnetic anomaly, and a small stake in the Lebedinsky mining and enrichment company. He sees NLMK as the core of his business. Lisin was the first of the Russian metals chiefs to announce an equipment overhaul program for his plant; as a result, NLMK is quite a modern plant compared to, say, Magnitogorsk or Nizhny Tagil.

NLMK plans to invest over $1 billion in production development over the next four to five years. Lisin, who used to manage Trans World Group's Russian affairs and is largely responsible for its demise, says his desire to spend money on production is justified. Within five to seven years, his competitors' empires won't be able to keep up because of their technological handicap, he explains.

Until spring of this year, Lisin struggled to build his empire. Then, after a two-year battle, TWG finally sold its NLMK stake to Interros, Lisin's former opponent. It took Lisin a year to persuade Vladimir Potanin to invest money in NLMK. But Potanin refused to do it through an additional share issue, forcing Lisin to get a $200-million bank loan.

The idea of investing in production, as foreign as it may seem to the oligarchs, is reasonable. Over the past decade, only a tiny portion of the profits have been reinvested into the metals production; the greatest achievement a top plant manager could have had to his name was a press release saying that production had resumed and that the plant had regular outputs. What resources fed the plant's operations or whether it was an attractive acquisition target was not important. That is why NLMK press releases refer to Lisin as the "professor" – he was the first to realize the importance of investment in production.

The allotment process ended fairly peacefully at the other two Big Nine companies – OEMK and Mechel. Gazprominvestholding, an investment arm of Russia's oil giant Gazprom, considers OEMK its subsidiary. At Mechel, Glencore, the reincarnation of Mark Rich and Co., voluntarily gave up control to Igor Zyuzin, the owner of a coal company Yuzhny Kuzbass.

At first glance, Alisher Usmanov, the head of Gazprominvestholding, is a serious candidate for Metals Emperor title. OEMK, built in 1990, is a modern plant that uses modern techniques for steel processing. Electric steel processing is considered the most promising direction for the future of ferrous metals. Moreover, OEMK has a controlling stake in Lebedinsky plant, the country's largest iron-ore producer. OEMK hardly requires any coal.

But Usmanov doesn't seem to be planning any territorial takeovers, most likely because Gazprom, the plant's ultimate owner, won't invest money in the metals sector. Gazprom couldn't even assist in lobbying for stan-5000 large-diameter pipe-making equipment to be installed at the Oskolsk plant.

Alexei Ivanushkin, Mechel's general director and a former head of Glencore's Moscow sub-division, is clear that building holdings doesn't interest him. Glencore bought Mechel as a launching pad to bring Mark Rich's empire back to Russia in 1996. At one point, Mark Rich and his partner Willy Schtrothotte, the head of Glencore, played just as significant a part in the Russian metals sector as TWG. But the Mechel project failed because German company Krupps refused to enter an alliance with Glencore in Russia. At that point, Mechel started searching for the buyers.

The plant, very efficient by Russian standards, found a buyer only by November 2000. Yuzhny Kuzbass and its partner Boris Zubitsky, the owner of Kemerovo coke-chemistry plant, began negotiations to buy Mechel. Today, Yuzhny Kubass has a controlling stake in the plant, while Zubitsky, rumor has it, has temporarily backed out of purchasing the rest of the shares. As a result, the takeover, which would have made Zyuzin and Zubitsky the owners of yet another empire, was paused in mid-stride. Ivanushkin has no reason to hurry in this situation.

But the list of potential "emperors" doesn't end there. Aside from the companies turning ore into cast iron and steel, there are companies turning scrap metal into steel, and they also carry a certain weight. The Taganrog steelworks, for example, controlled by Moscow group Alfavit, is far removed from metals-sector assets carve-ups, as it uses scrap metal. The MAIR Group, which controls 40 percent of the scrap metal market, also bases its business on ferrous scrap metal.

Furthermore, major players such as Alfa Group and MDM Group have become involved in rebuilding technical links in the metals sector. MDM already began building a metals holding, while Alfa made an unsuccessful attempt to acquire Tagmet, and is likely to go after other metals companies. But neither Alfa nor MDM have the administrative resource to convert money into assets that turn into even larger chunks of money.

Rossiisky Kredit, which is coming out of a slumber, will also probably want to expand its empire. The Metalloinvest holding, closely affiliated with Rossiisky Kredit, controls the Mikhailovsky and Stoilensky plants. Alisher Usmanov tried to buy both at one point, but the deal didn't go through. Metalloinvest also owns Tulachermet and a number of steel rolling plants, such as Orlovsky. Boris Ivanishvili, a co-owner of Rossiisky Kredit, is one of the contenders for the metal king's crown.

There are plenty of other challengers who want to get rich. Anything is possible in the Russian metals industry so long as a director of a Big Nine company can find himself replaced during negotiations with an influential governor; so long as someone like Mikhail Zhivilo can go from being the head of an empire to being an accused murderer within six months; so long as the fate of a $1-billion contract is decided not based on its financial effectiveness, on the personalities of influential its lobbyists in the government. The history of how metals companies acquire shareholders is still far from complete.