Monday, September 08, 2008

Severstal eyes U.S. steel market for growth

Severstal will spend up to $1.4 billion in the next four years to make its U.S. steel mills more competitive as Russia's largest steel maker bets on a robust North American economy and long-term demand for steel.

Chief Operating Officer Gregory Mason said the Russian steel giant had faced no political obstacles in establishing itself as the fourth-largest steel producer in the United States and would continue to pursue U.S. acquisitions, particularly in coal.

"We are not just witnessing, but we are very active participants in the re-industrialization of America," Mason, the chief executive of Severstal's international division, said in an interview ahead of the Reuters Russia Investment Summit.

Steel makers in Russia, the world's fourth-largest producer, have snapped up around a tenth of U.S. steel capacity as they spend record profits transforming themselves from Soviet-era behemoths into international players amid a commodities boom.

Severstal, majority-owned by billionaire Alexei Mordashov, has spent about $3 billion on U.S. acquisitions in the last year, most recently agreeing a $1.3 billion deal to buy coal miner PBS Coals Corp to secure better access to raw materials.

"In North America, our foremost objective is to secure our vertical integration; to have enough raw materials," Mason said.

"Are we buying PBS to take American coal to Russia or elsewhere? No: we need it in the U.S. to feed our U.S. facilities, to ensure that we can run a sustainable business in the U.S. and our employees will have secured jobs."

Source- Reuters

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