Severstal mulls sale of North American steel mills

Multiple sources have reported that Severstal is looking to sell its two steel mills in the United States, which could net the company $1.5 billion. The two mills are located in Dearborn, Michigan, and Columbus, Mississippi.

Severstal North America, which owns the two steel mills, is a subsidiary of the Russian firm Severstal Group. The Severstal Dearborn facility was formerly known as Rouge Steel. Severstal purchased the Michigan mill 10 years ago for $285 million. The company acquired the Columbus operation six years ago.

The Wall Street Journal (WSJ) reports that parties interested in acquiring the assets include Brazil's CSN and US Steel, which is one of the Dearborn mill's competitors in the U.S. automotive steel market. According to the WSJ, the two steel mills are operating at 96 percent of crude steel capacity.

Completed in 2007 at cost of $980 million, Severstal Columbus is a steel minimill that recycles ferrous scrap into a range of steel products. The mill completed a $555-million expansion in 2011 that doubled its size and increased production capacity to 3.4 million tons per year. The project included the addition of a second electric arc furnace and thin strip caster, stationary tunnel furnace, push-pull pickle line and a second hot-dip galvanizing line.

In response to the reports, Severstal Group released a statement acknowledging that it is “considering a range of strategic options in relation to Severstal North America.” However, the statement notes that at present “no decision has yet been taken as to which, if any, such option might be pursued.”