Detroit Free Press reported that Severstal's North American subsidiary will no longer be receiving a USD 730 million loan to produce advanced high strength steel for autos in Dearborn.

A US Department of Energy official confirmed that after reviewing Severstal North America's project, which had received a conditional local commitment under the agency's Advanced Technology Vehicle Manufacturing program months ago, it was decided that the agency would not award the funding after all.

DOE spokesman Damien LaVera said “As we have consistently said, the additional due diligence the department conducts after a conditional commitment is signed is an important part of the process and is vital to protecting the taxpayers. Not every project that received a conditional commitment closes its loan. After conducting a thorough review of this loan application, the department has decided not to move forward.”

The department does not disclose its reasons for not closing on loans, but LaVera said officials still believe the project has merit and noted it as already has some success in obtaining private financing.

Ms Katya Pruett SeverStal NA’s spokeswoman said that “Severstal is deeply disappointed by the decision. Severstal will be reviewing alternative financing options to continue its modernization and expansion programs and remains committed to its automotive customers.”

It was not immediately apparent whether the loss of funding would put jobs at risk. At the time the conditional loan commitment was announced last summer, Severstal North America had already filled more than half of the plant jobs expected to be created by the loan. When the conditional loan commitment was announced in July, the company said it expected its modernization efforts in Dearborn to create an estimated 2,500 construction jobs, 260 permanent manufacturing jobs and allow it to retain 1,400 manufacturing jobs.

(Sourced from freep.com)