Russian steel giant OAO Severstal Group is moving deeper into the North American automotive steel market.
Severstal is building an $880 million (nearly E736.6 million) steel mill called SeverCorr in Columbus, Mississippi.
The venture will supply the expanding auto market around the southeast of the US. It brings together a wide range of financiers and incentives including Russian investors, funding from a German export bank and loans and state incentives from Mississippi.
Over the past two years, Severstal, of Moscow, has taken steps to capitalize on North America's straining supply of finished steel for vehicles.
In December 2003, Severstal purchased the Rouge Industries steel plant in Dearborn, Michigan, outbidding US Steel for the publicly owned 80-year-old plant. The Rouge plant originally was Henry Ford's source of steel for Ford vehicles.
The Mississippi venture, which held a groundbreaking ceremony last month, is initially targeting about 30 percent of its capacity at the auto industry, says SeverCorr CEO John Correnti.
Correnti, the former CEO of steel producer Nucor Corp., forecasts that about 250,000 tons of the mill's 1.5-million-ton annual capacity will go to exposed steel applications on vehicles.
He said that about the same amount will go to nonexposed vehicle applications when the mill comes on line in late 2007.
For the past two years, North American automakers have been socked by rising steel prices as world demand outstripped global capacity. US steel consumers, including the auto industry, are now relying on imports for more than a quarter of their needs.
Correnti said Severstal is providing about $200 million of the cost and KfW IPEX Bank, a bank affiliated with the German government, is providing about $230 million in financing.
Severstal is the world's sixth largest steel producer.