Russia's biggest steelmaker, OAO Severstal, announced it is set to separate Nord Gold N.V. subsidiary from its integrated steel operations, as well as possibly list the latter in the London Stock Exchange.

The separation will allow both firms to concentrate on their respective core areas of activity as well as adopt tailored business models, managerial approaches and reporting structures to reflect different positions in markets and geographies where they operate, Chris Clark, chairman of OAO Severstal's board of directors, said in a statement.

Nord Gold N.V.'s possible listing at the London Stock Exchange will likewise elevate its profile, giving direct access to funding, Clark added. In February, OAO Severstal cancelled a planned $1.5 billion public offering of Nord Gold N.V. due to lack of investor interest.

Alexei Kulichenko, chief financial officer of OAO Severstal, said on Wednesday Nord Gold N.V.'s listing at the London Stock Exchange could still happen at a later date conditions for the listing were not met immediately.

The $13 billion-worth OAO Severstal, 82 per cent owned by Alexei Mordashov, Russia's second-richest man, targets to complete the separation by late January 2012.

The spin-off will be carried out by a swap of shares from OAO Severstal for Nord Gold N.V.'s global depository receipts (GDRs) held by its own investors.

Established in 2007, Nord Gold N.V. has spent more than $1 billion buying mines in West Africa and Kazakhstan, with expected 2011 output of up to 840,000 ounces.

Nord Gold N.V., upon its separation from OAO Severstal, could have a value of $2.8 billion, analyst Igor Lebedinets said in Bloomberg News.

OAO Severstal's shares, however, were down 6.6 per cent to 419.5 roubles at 1240 GMT.

"The valuation (of Nord Gold) could actually be lower than the one currently being priced by OAO Severstal," Lebedinets said.

Nord Gold N.V. has said it will continue acquisition opportunities even in the absence of a London listing.