July 21, 2014 10:05:58 AM
Severstal Columbus will be formally sold by the end of the year.
Steel Dynamics Inc., an Indiana-based steel producer and metal recycler, announced this morning that it has agreed to purchase the Lowndes County steel plant from Severstal. Steel Dynamics said it will pay the Russia-based company approximately $1.6 billion for the facility, which is located on 1,400 acres near Airport Road.
The sale has been approved by both of the companies' boards of directors. It is expected to be finalized by the end of 2014, according to a statement released by Steel Dynamics.
The plant employs roughly 650 people.
Mark Millett, the CEO of Steel Dynamics, indicated this morning that the company has no plans to change the plant's operation.
"The acquisition of Columbus represents a significant step in the continuation of our growth strategy," Millett said in a statement. "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 addition of the plant, which makes steel out of scrap metal and is one of the most technologically advanced mini-mills in North America, will increase Steel Dynamics' annual steel shipping capacity by roughly 40 percent, to 11 million tons.
Construction of the plant began in the fall of 2005. It began operations in 2007. Three years ago, Severstal more than doubled the size of the mill, adding a second electric arc furnace, caster and tunnel furnace, and a second galvanizing line, according to Steel Market Update.
In a separate announcement this morning, AK Steel Holding Corp., which is based in Ohio, said it is buying Severstal's steel plant in Dearborn, Michigan, for $700 million.
Severstal specializes in steel for the automotive sector and household goods.
The company's communications director did not respond to messages seeking comment by press time today.
Rumors of Severstal looking to sell its North American sites began to circulate earlier this year as the West threatened sanctions against Russia for its activity in the Ukraine, but Severstal was not among those companies targeted by those sanctions.
The company is controlled by billionaire Alexei Mordashov of Russia. Mordashov told several news outlets this summer that the potential sales were a cost-cutting move.
However, Agence France Presse, an international news agency headquartered in Paris, published a story today stating that Severstal, in the wake of the worsening standoff over Ukraine between Moscow and Washington, "was particularly at risk of being hit eventually by sanctions because Mordashov was a stakeholder in Bank Rossiya, a Russian bank put on the U.S. Treasury's blacklist in March."
The Associated Press contributed to this report.
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