SeverStal, Russia's biggest steelmaker, yesterday became America's fourth-largest,with an $810 million (£408 million) purchase from ArcelorMittal.

It has bought Sparrows Point, an integrated steel mill in Baltimore, after US competition authorities forced ArcelorMittal to sell assets following the merger that created it two years ago.

SeverStal has plants in Dearborn, Michigan, and Columbus, Mississippi, and moves up the US rankings behind ArcelorMittal, Nucor and US Steel. The Russian company said that it could achieve synergies with its other operations.

SeverStal's acquisition of Sparrows Point comes after a $4 billion deal last week by its rivals Evraz, which is part-owned by Roman Abramovich, and TMK to buy a Canadian steel plate and pipe business from SSAB, the Swedish group.

Russian companies, which have benefited from a booming domestic economy, have been urged by President Putin to buy more overseas assets and increase Russia's economic clout.

Alexei Mordashov, SeverStal's chief executive and majority owner, said that he believed that longer-term prospects for the US economy were good, despite the current downturn. “We remain committed to growth in North America and believe in the long-term promise of the US market,” he said. “We're confident that this acquisition will create value for our shareholders while strengthening our US platform as a whole.”

Gregory Mason, chief operating officer of SeverStal, said: “We are in this for the long term - we are not traders, this is consolidating our operations. Even if things go down a little in the US market, we don't expect it to last for long. America cannot produce the steel it needs, that's why it has had to rely on imports.”

This week SeverStal reported that profits last year leapt 33 per cent to $1.9 billion for last year, partly on surging demand in Russia. However, itsNorth American profits fell by 85 per cent to $21 million after weaker market conditions and a $350 million overhaul of a blast furnace that closed the Dearborn plant for several months. Mr Mason said that the work on the blast furnace was planned and 2007's results should not be seen in isolation.

The company plans to spend about $500 million on the Sparrows Point plant in a five-year programme of improvements. It bought the mill for cash.

Sparrows Point is the only integrated steel mill on the US East Coast. It has capacity of 3.6 million tonnes of crude steel and last year produced 2.3 million tonnes of finished products. Mr Mordashov said that the plant had “unlocked growth potential”, as well as existing value.

SeverStal smoothed the way for the Sparrows Point acquisition by first reaching a collective bargaining agreement with the United Steel Workers. The acquisition, which requires US Justice Department approval, is expected to be completed in the second quarter of this year.

Explore Industry Sectors

• Banking & Finance

• Construction & Property

• Consumer Goods

• Engineering

• Health

• Industrials

• Leisure

• Media

• Natural Resources

• Retailing

• Support Services

• Technology

• Telecoms

• Transport

• Utilities

Times Recommends

• B&B shareholders forced into funding rescue
• John Lewis department store sales plunge 8.3%
• Families turn to credit to cover mortgage bills