SDI says the acquisition expands its annual steel production capacity by nearly 40 percent to 11 million tons. Additionally, the purchase of Severstal Columbus will give SDI additional exposure to the high-growth oil sector and automotive segments, which will complement SDI’s existing market offerings, the company says.
“The acquisition of Columbus represents a significant step in the continuation of our growth strategy,” says SDI’s CEO Mark Millett. “It leverages our core strengths and at the same time fulfills our initiatives to further increase value-added product and market diversification. We enthusiastically look forward to welcoming the Columbus employees and customers into the Steel Dynamics family, and working with them to drive future growth and success.”
The Columbus facility, commissioned in 2007, is reportedly one of the only North American flat-roll mills to have 76-inch-wide hot roll, 74-inch-wide cold roll and 72-inch-wide galvanized sheet capabilities. The mill has an annual hot-roll production capacity of 3.4 million tons.
Following the original commissioning in 2007, between August 2007 and November 2011 Severstal North America installed a second electric arc furnace (EAF), ladle metallurgy furnace, caster, tunnel furnace, hot dip galvanizing line and a heavy gauge push-pull pickle line at the Columbus mill complex.
“We have been positioning our balance sheet and organizational structure for growth such as this," Millett continues, "and we believe this acquisition will result in a prudent capital structure that will allow us to again return to our preferred net debt leverage of less than three times trailing EBITDA (earnings before interest, taxes, depreciation and amortization) within a reasonable time frame. The expected earnings accretion and increased scale make this transaction a meaningful strategic opportunity for our shareholders and all of our employees.”
SDI presently has five existing steel mills, six steel processing plants, two iron production facilities, more than 90 metals recycling locations operating under the name OmniSource and six steel fabrication plants.
Severstal North America also has sold its Dearborn, Michigan, subsidiary to AK Steel, based in West Chester, Ohio, for $700 million. The acquisition includes a coke-making facility and interests in three joint ventures that process flat-rolled steel products.
“The acquisition of Severstal Dearborn allows us to grow our business profitability and better serve our customers,” says James Wainscott, chairman, president and CEO of AK Steel. “It furthers our automotive strategy and strengthens our carbon steelmaking footprint. It also combines great employees at Dearborn with great employees at AK Steel to strengthen a terrific company that is better able to compete, and to win, in the global steel marketplace. We welcome the employees of Dearborn to AK Steel.”
The Dearborn plant produces flat-rolled steel, primarily for the automotive, construction and appliance markets. AK Steel says the Dearborn steel mill’s blast furnace, which was rebuilt in 2007, is among the most efficient and productive blast furnaces in the world for its size.
The plant also began operating a new pickle line tandem cold mill and a new hot dip galvanizing line in 2011. The plant is capable of producing about 2.5 million tons of finished steel per year. Upon completion of the acquisition, AK Steel’s annual shipments are expected to exceed 7.5 million tons.
With the sale of the assets to SDI and AK Steel, Severstal has exited the North American steel market.