The agency also affirmed its B+ corporate credit rating on the company, and its ruA+ national scale rating.
S&P analyst Tatiana Kordyukova said, "The outlook revision reflects the fact that Severstal's business profile would benefit from vertical integration into coal and iron ore, which will help to mitigate swings in raw material prices and bolster the company's profitability."
"The mining subsidiaries to be consolidated are expected to cover about 70%-80% of iron ore and coking coal requirements in Russia," the analyst said.
"The consolidation will be carried out though share swaps of the controlling stakes in the mining enterprises for an additional issue of Severstal's shares... The transaction will be structured in several stages, which are subject to shareholder and some regulatory approvals. Should the final terms of the transactions differ significantly from the proposed ones, Standard & Poor's might reassess the impact on the company's credit quality."
In the long term, Severstal's credit status will depend on the company's strategy, focused on geographic diversification, and the modernization of its asset base in Russia, the agency said.