"Everything dropped by about 25 to 30 percent," chief executive Vladimir Yakunin said in an interview April 6, referring to rail purchases.
Evraz Group and Mechel last year proposed setting up rival steel mills to make rails for the monopoly operator, which said it would offer $400 billion of contracts to metal, building and timber companies through 2030. Russian Railways this year cut investment plans by 37 percent from the 400 billion rubles ($12 billion) it spent on upgrades in 2008.
Billionaire Igor Zyuzin's Mechel plans to spend more than $500 million to build a rail-making mill at its main plant in Chelyabinsk. The steelmaker has a 20-year contract with Russian Railways and may begin shipping track in 2012 after passing tests on quality and safety that are required by law.
Spending cuts by Russian Railways may affect earlier plans to buy at least 400,000 tons of rails a year from Mechel, Yakunin said, without being more specific.
"It is already affected because of the decrease of our investment program," he said. "But as for our cooperation, it won't be affected."
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