Severstal to exit North America, to sell two steel plants worth $1.5 bn

OAO Severstal has put its North American operations on the block, a sale which may fetch Russia's second-largest steelmaker around $1.5 billion, The Wall Street Journal yesterday reported, citing people familiar with the matter.

Severstal has received interest from two potential buyers, US Steel Corp, and Brazil's Companhia Siderurgica Nacional SA.

Severstal's US operations comprise two steel mills located in Dearborn in the state of Michigan and Columbus in Mississippi. The two units generated sales of about $1 billion in the first quarter.

Severstal Dearborn produces high quality flat-rolled products, including hot-rolled band and hot rolled processed sheet for major North American automotive customers

Severstal Dearborn, formerly called the Rouge Steel Company, an integral part of Henry Ford's River Rouge automobile complex, had been in the steel manufacturing business since the early 1920s, first as a division and later as a subsidiary of Ford.

Severstal acquired the Dearborn plant in 2003 from Rouge Industries for $285 million, and has since spent $740 million in mordernising the facility.

Severstal Dearborn has ownership interests in Double Eagle Steel Coating Company, a joint venture with US Steel Corporation located in Dearborn, and  Spartan Steel Coating, a joint venture with Worthington Steel of Michigan, which produces hot-dip galvanized sheet steel primarily for automotive and service center customers.

Severstal Columbus is located on a 1,400-acre site in Mississippi's ''Golden Triangle'', close to major North American automotive customers and the expanding Southern manufacturing region of the US.

The plant produces high quality flat-rolled products for the automotive industry, agriculture, appliance, building and construction products, electrical and energy, furniture, HVAC, lighting, machinery and rack manufacturers, plus a variety of pipe and tube, and service centre companies.