The group, which supplies the majority of steel to Russia’s car industry, said that it would price its shares and global depositary receipts at between $11.0 and $13.5 each.

City sources said that the range would enable the group to raise between $1 billion and $1.5 billion (£529 million to £822 million) of fresh capital. Those figures conflict with comments made this month by Alexei Mordashov, SeverStal’s majority shareholder, who said that the group planned to raise up to $1.72 billion.

Mr Mordashov, Russia’s seventh-richest man, owns 90 per cent of SeverStal, with the remaining 10 per cent listed in Moscow. He has spent recent weeks conducting investor roadshows with financial institutions in London, drumming up support for the listing.

The London IPO will dilute his ownership to below 80 per cent, but he has ruled out reducing it below 75 per cent.

SeverStal, which this year acted as a white knight bidder for Arcelor, proposing a tie-up that would save the metals group from Mittal Steel, announced plans to list in London this month.

The move comes after its proposal for Arcelor was shunned as investors sided with Mittal Steel.

SeverStal plans to use the proceeds of the flotation to boost its balance sheet to help to lead the next round of consolidation in the industry.

The group already has a listing in Moscow. However, a London listing will give it a more visible presence in financial markets and make it easier for the company to tap Londonfocused investors for funds. A London listing will also give the group’s shares the credibility to carry out all-share deals.

The flotation will bolster the Kremlin’s ambitions to create a national champion that can compete against rivals worldwide. The group had long been rumoured to be a potential bidder for Corus, the Anglo-Dutch steelmaker, which this month agreed a tie-up with Tata Steel, of India.

The Russian group already has extensive interests abroad. Its business in North America, which trades under the SeverStal name, is the fourth-largest steel producer in the United States.

The funds will also be used to improve the quality of its production facilities and make its operations more efficient.

One of the group’s stated ambitions is to become the world’s most profitable operator. It is currently sixth in that league table. Last year SeverStal produced sales of $11.6 billion and accounted for 27 per cent of Russian steel exports in the year.

Alongside its steel assets, the company also has iron ore and coal assets that provide raw materials for the group. Mr Mordashov is planning to build SeverStal eventually into one of the world’s top two steelmakers.

Analysts believe that there will be heavy demand for the shares, amid strong commodity prices and general enthusiasm for natural resources stocks.

IG Index, the betting firm, is offering a spread of $12.85 to $13.15 on where the shares will start trading on the first day of unconditional trading. The shares are expected to list in London early next month.

SeverStal, which was privatised in 1994, is being advised by Citigroup, Deutsche Bank and UBS.

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