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Severstal CEO Says Growing Use of Aluminum in Cars Concerns Him

OAO Severstal Billionaire CEO Alexey Mordashov
OAO Severstal billionaire Chief Executive Officer Alexey Mordashov said, “We see global steel demand growing by 3.5 percent to 4 percent this year, but the shutting of capacities is going slower.” Photographer: Andrey Rudakov/Bloomberg

OAO Severstal billionaire Chief Executive Officer Alexey Mordashov said the growing use of aluminum in cars is a concern for steelmakers, as the industry grapples with excess capacity.

The use of substitutes for steel by the auto industry has “been evident for decades,” Mordashov said in an interview with Bloomberg Television at the St. Petersburg International Economic Forum today. Steelmakers have previously responded to the challenges posed by substitute materials and should do so again, he said.

Automakers have started to use increasing amounts of aluminum because it reduces the weight of vehicles and assists in curbing carbon emissions and meeting environmental standards. Ford Motor Co. will roll out its aluminum-bodied F-150 pickup this year. The model may add more than 250,000 tons to U.S. aluminum demand, according to Bloomberg Industries.

His industry continues to confront overcapacity, Mordashov said.

“We see global steel demand growing by 3.5 percent to 4 percent this year, but the shutting of capacities is going slower,” Mordashov said. Last year, the 48-year-old CEO said countries need to agree on global cuts in production to save the industry from itself. “We were heard, but nothing is happening in that regard.”

Mordashov, the ninth-richest Russian, has an estimated fortune of $12.1 billion according to the Bloomberg Billionaires Index.

No Pressure

Severstal is considering options for its U.S. assets, which include a furnace originally built by Henry Ford in Michigan, and which supply steel to companies from Ford to Chrysler Group LLC.

Severstal is weighing two choices for its plants in Dearborn and Columbus, Mississippi, Mordashov said today -- to develop them, or dispose of them. There has been “strong” interest in the assets, he said.

Severstal has experienced no pressure because of the Ukraine crisis and this is not a factor in the possible sale of the U.S. business, Mordashov said. “Diminishing trust” has been the worst result so far of U.S. and European Union sanctions against the Russian government, he said.

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