Severstal North America Reports Favorable Order in Court Case

In an announcement by Severstal North America, Dearborn, Mich., the steelmaker says a Mississippi Circuit Court has issued an order allowing it to purchase scrap metal outside vendors after meeting an initial requirement with its contracted supplier, Jefferson Iron & Metal Brokerage, Birmingham, Ala.

The release says that an Order issued by the Circuit Court of Lowndes County, Miss. has stated that “Severstal may purchase scrap directly from other vendors as long as the requirement of the first 30,000 gross tons per month is purchased from Jefferson Iron & Brokerage as provided in the contract.”

The suits and countersuits between the two companies comes from an agreement that was signed in 2006 that had Jefferson Iron provide Severstal, then known as SeverCorr, no less than 30,000 tons of scrap metal each month. According to the Columbus (Mississippi) Dispatch, the contract was slated to run through September 2012.

However, in April 2011 Severstal decided to drop Jefferson as their supplier as it developed its own collection system. In its initial suit, Jefferson Iron claimed that Severstal owed it “more than $12 million in damages” if the steelmaker worked directly with vendors without paying it a $2-per-gross-ton fee per its contract. Severstal filed suit looking to clarify its position. Jefferson Iron followed with a countersuit, saying the contract was still good and sought to enjoin the company from directly dealing with the vendors.

In its announcement, Severstal North America says that the court’s understanding of the parties’ rights and obligations to purchase and sell scrap pursuant to the contract comports precisely with Severstal’s stated position.

In conclusion, Severstal adds that it is confident that the latest ruling will help allay any concerns of its direct scrap vendors.