From Moscow to Mississippi

The man who is reportedly the richest oligarch in Russia and the target of numerous international sanctions because of his country’s recent invasion of Ukraine played an important role in one of the Golden Triangle’s biggest economic development moments of the last two decades.

In fact, Alexey Mordashov is arguably why one of the region’s top employers exists today.

In 2014, Steel Dynamics Inc. bought a steel mill in the Golden Triangle Industrial Park for $1.6 billion. The Indiana-based steel producer is now one of Lowndes County’s top five manufacturing employers, said Meryl Fisackerly, vice president of economic development and existing industry with the Golden Triangle Development LINK.

The mill Steel Dynamics purchased had started operations seven years earlier under the ownership of SeverCorr — a company Mordashov essentially bankrolled.

Lowndes County Supervisor Harry Sanders remembers attending an event to celebrate the SeverCorr plant’s ongoing construction in 2006, a gathering attended by hundreds, including Mordashov, who addressed the crowd.

“There was a big tent, lots of dignitaries,” Sanders said. “It was a big deal.”

It was an important moment for the Golden Triangle because, at the time, the region was industry-poor. “There had not been a lot of success,” said LINK CEO Joe Max Higgins of the area’s efforts to lure in industry.

State and local leaders offered SeverCorr an attractive package of loans, grants and tax incentives to land the company. For the state, the investment was a long-term gamble, one local leaders hoped would pay off by the expansion of the local tax base and by attracting other companies from the engineering and steel processing sector. For its part, SeverCorr said it would turn out 1.5 million tons of flat-rolled steel made each year and eventually employ at least 450 people.

For the Golden Triangle, the bet has paid off.

Since purchasing the mill eight years ago, Steel Dynamics has expanded its facility, and the company directly employs about 850 people today at its Columbus campus, Fisackerly said. It is responsible for roughly 1,500 jobs, directly and indirectly, Higgins said.

Those positives can be traced back to Alexey Mordashov’s initial faith and — most importantly — $200 million investment in the Lowndes County project.

But Mordashov’s name is not making headlines globally today because of any impact he had on the Golden Triangle economy.

Since Russia attacked Ukraine in late February, the European Union and others have levied sanctions on more than a dozen Russian billionaires.

Mordashov, who is worth more than $29 billion, according to Forbes, is one of the oligarchs being targeted. EU and US sanctions are meant to bottom out Russia’s economy and pressure Russian President Vladimir Putin to withdraw troops from Ukraine.

Long before Mordashov was pulled into the middle of the bloody Ukrainian conflict, he was a relatively young billionaire Russian businessman, living in Moscow, looking to invest in the U.S. steel industry, and when he turned his attentions toward the possibility of financing a steel mill in Lowndes County, it changed how the area viewed itself and its economic development potential.

“Now,” Higgins recalled thinking, “you’re playing with a heavy hitter.”

Road to partnership

It began with the late John Correnti.

A business executive who had worked in the steel industry since 1969, Correnti was looking to build a steel mill in the South in the early 2000s. He named the venture Steelcorr and partnered with billionaire investor Carl Icahn. The first tentative plans were to build the mill in Arkansas, according to The Commercial Appeal.

When that plan fell apart, Icahn backed out. Mordashov, then worth approximately $8.6 billion, stepped in.

The details of how he came to be involved are unclear, but the oligarch — who reportedly has a personable manner tied to humble roots and quotes Russian poetry from memory — was certainly not a new figure in the steel industry.

Mordashov was born in 1965, in the Soviet Union town of Cherepovets, where both of his parents worked at a government-owned steel plant called State Enterprise ChMK, according to the Associated Press. He learned English while studying business at a British college and moved back home to be a finance manager at the Cherepovets steel plant, according to Fortune.

After the Soviet Union failed and Russia privatized much of its industry in the early 1990s, State Enterprise ChMK was rechristened Severstal and Mordashov began acquiring shares of the company. (According to Forbes, he did so on the advice of the plant’s elderly director, who wanted to keep “outsiders” from the shares.) By the late 1990s, Mordashov was Severstal’s CEO and largest shareholder. A few years later, he looked to expand to the U.S.

In 2003, Severstal purchased the historic Rouge steel mill in Michigan for $285 million, a move that made Mordashov the first “major Russian investor” in the U.S., according to Fortune. Mordashov told the magazine “the technology was 150 years old” at the plant. Severstal spent about $1.5 billion on upgrades. Perhaps that is why Mordashov, for his next venture, chose to build a new facility from the ground up.

In 2005, he partnered with Correnti, putting $200 million in capital into Steelcorr, which was renamed SeverCorr.

From Moscow to the Golden Triangle

Not long after Correnti’s deal in Arkansas fell through, he turned to Mississippi.

In the fall of 2004, two of his representatives showed up unannounced at The LINK offices in Columbus. The company, which was looking to focus on supplying steel to automakers in the South, was drawn to the area primarily because of its location near multiple car manufacturers, according to Trade & Industry Development.

With an opportunity to land an industry that could potentially bring hundreds of jobs and millions of dollars in taxes to the region, Higgins and his team went to work. The project’s codename was “Bluewater.”

To make the Golden Triangle site more attractive to the steel company, the Mississippi Development Authority committed $25 million for site preparation. Lowndes County purchased 1,400 acres for $6.5 million and invested another $5 million in getting the site build-ready, according to the Clarion-Ledger.

What sped up negotiations was then-Gov. Haley Barbour’s approval of a $60 million loan for the SeverCorr project in the spring of 2005. That commitment from the state, Higgins said, helped seal the deal.

When it was finalized, on Sept. 30, 2005, Higgins went to New York, where he met Mordashov. He does not remember specifics from the meeting, other than trying to offer a “comfort factor” to the oligarch.

“I let him know Lowndes County would do what we said we would do,” Higgins said.

In terms of bringing in industry, the deal marked The LINK’s first big “get.” The SeverCorr mill was the first steel mill built in the U.S. in more than a decade, according to Trade & Industry Development, and Mordashov, Higgins said, was involved “from the moment we first turned dirt.”

It was a $880-million steel mill.

Taking over, leaving

Mordashov visited the Golden Triangle at least twice, Higgins said: once to see how construction was proceeding, once to see the plant open.

The full opening was in August of 2007. By December of that year the 1.2-million-square-feet plant was producing 90,000 tons of steel, according to the AP. That same month, it was announced that Severstal was buying out Correnti and other SeverCorr executives. After that purchase was finalized, the SeverCorr plant changed names again, becoming Severstal-Columbus. It eventually employed roughly 650 people and was capable of producing 3.4 million tons of steel a year.

In 2014, Severstal sold both its Michigan plant to AK Steel for $700 million and its Lowndes County plant to Steel Dynamics for $1.6 billion. At the time, Mordashov claimed that, after working in the U.S., Severstal “came to the conclusion that … our future is tied to Russia, to the Russian market, and our local production is the most effective,” according to Russian News Agency TASS, a government-controlled media agency.

But the timing suggested another reason was at play. The sales occurred just months after former President Barack Obama imposed sanctions on several Russian businessmen and companies after the Russia military seized Crimea from Ukraine. Those sanctions were, among other things, aimed at banning Russian companies from doing business with U.S. companies.

Mordashov and Severstal have not done business in the U.S. since.

Current situation

Since purchasing the Severstal plant in 2014, Steel Dynamics has not looked back, becoming a mainstay in the Golden Triangle economy. It recently completed a $250 million expansion that included a new galvanizing line that allows the plant to cover its steel products with a protective coating. The move created roughly 45 new jobs, according to Steel Dynamics.

Meanwhile, the European Union, in explaining its sanctions on the oligarch, has stated that Mordashov is tied financially to media companies that played a role in destabilizing Ukraine by broadcasting pro-Russian propaganda. The EU also claims he has interest in Rossiya Bank, the bank of Russian officials who have accumulated wealth since Russia claimed Crimea, according to The Guardian.

In a recent statement released through the TASS, Mordashov claimed to have “never been close to politics.”

“I do not understand why the (European Union) has imposed sanctions on me,” he said,“… and I fail to understand how these sanctions against me will contribute to the settlement of the dreadful conflict in Ukraine.”

His denials have not slowed the sanctions. Not only are his finances being targeted, his luxury items are, too.

Last week, Italian authorities confiscated Mordashov’s 215-foot long yacht — an American-made vessel named “Lady M” — while it was moored at a port in northern Italy, according to Reuters.

In response to the sanctions, the 56-year-old Mordashov, in the last few weeks, has shifted control of some of his wealth to his wife, as well as stepped down from numerous high-level positions he held at other companies, according to The National, a news service based in the Middle East.