Oct. 6 (Bloomberg) -- OAO Severstal Chief Executive Officer Alexei Mordashov said the U.S. remains attractive for steel investments and that his company plans to boost spending there.

``Despite all its ups and downs, we believe in the long run the U.S. will do very well,'' Mordashov said today at a Washington conference. ``We're going to invest further in our facilities.''

Severstal has expanded in the U.S. through the acquisition of Esmark Inc. for about $775 million and the $1.3 billion purchase of PBS Coals. Cherepovets, Russia-based Severstal has invested in flat-rolled steel for the auto and appliance industries in North America and is considering products such as bar steel used in construction.

Rising operating costs in Russia are encouraging the nation's steelmakers to acquire operations outside of the country, according to Rob Edwards, managing director of metal and mining at Moscow-based Renaissance Capital Ltd. Severstal plans to spend about $16.3 billion through 2012 to upgrade and expand its global operations, according to a June 24 bond prospectus.

The Russian steelmaker now runs four mills in North America, including a plant in Dearborn, Michigan, that supplies Ford Motor Co. and the SeverCorr factory in Columbus, Mississippi. Mordashov said in June he would allow his 82 percent stake in the company to be diluted by more than half, to as little as 40 percent, if stock is issued to fund purchases.

Acquisitions Continue

Acquisitions among steelmakers will continue, Mordashov said. Regions where the steel industry is concentrated among fewer producers, such as the U.S. and Europe, will have a greater degree of resilience to market fluctuations, he said.

``The steel industry is still very fragmented and consolidation has proved very healthy,'' Mordashov said. ``We should expect the continuation of fundamental trends, which consolidation is. You see a clear trend toward the creation of global companies, bigger companies, stronger companies.''

That view is shared by Daniel Dimicco, CEO of Charlotte, North Carolina-based Nucor Corp, the largest U.S.-based steelmaker. The current market conditions will provide opportunities for joint ventures, mergers and acquisitions, he said at the conference.

To contact the reporter on this story: Stewart Bailey in New York at sbailey7@bloomberg.net.

Last Updated: October 6, 2008 17:38 EDT