OAO Severstal Requests $730 Million US Loan For Auto Steel
OAO Severstal, has asked for a $730 million U.S. government loan for a new production unit making lighter steel for the auto industry. OAO Severstal, who already supplies to General Motors Co. and Ford Motor Co., wants to expand is a to expand in Michigan at its Dearborn plant. The loan will be used to make lightweight, high- strength sheet steel for automakers.
Recently, Severstal just sold to Renco Group three of its US mills: Sparrows Point, Warren and Wheeling mills as they were no longer profitable operations. If Severstal does win this loan, it will be the first Russian company to win a U.S. government loan under the Advanced Technology Vehicles Manufacturing plan, according to the U.S. Energy Department.
This program, endorsed by President Obama, includes $25 billion in incentives to help persuade automakers produce vehicles more friendly to the environment.
The loan’s interest rate is estimated at 2.5%, compared with an average 7% on Severstal's current debt. Only five loans have been awarded with this program, going to Ford, Nissan North America, Fisker Automotive Inc.,Tesla Motors Inc, and the Vehicle Production Group since 2008.
If Severstal gets this loan and uses it for new Dearborn facilities, the plant will have an output capacity of 900,000 metric tons of advanced, high-strength steel. Severstal wants to supply Asian and European car producers in the U.S. with its new automotive steel once the new product lines are operating as well as its current customers.