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Russian billionaire's 'heart' made of steel PAUL WALDIE >From Saturday's Globe and Mail Alexei Mordashov is not your typical Russian billionaire. The 40-year-old speaks three languages, earned an MBA in Britain, lived in Austria for years and sits on the boards of several European companies including Deutsche Bank. Yesterday he became the steel industry's biggest player. Through a series of moves involving his Russian company, OAO Severstal Group, and Luxembourg's Arcelor SA, the two companies have joined forces to become the world's largest steel producer. Arcelor's holdings span the globe and include Canada's Dofasco Inc. Once the deal closes, Mr. Mordashov will own 32.2 per cent of Arcelor and co-head the company's board of directors. He will also appoint six of 18 directors and help find a successor to Arcelor's current chief executive officer, which could well be himself. "I believe in this industry," Mr. Mordashov told reporters yesterday in perfect English. "My heart is in the steel business." Mr. Mordashov played down his wealth, estimated to be nearly $8-billion, and his impeccable connections (he reportedly met recently with Russian President Vladimir Putin to discuss the Arcelor deal). He joked that his success was largely the result of timing, being a young manager in a Russian steel plant just as the country lurched its way toward privatization a decade ago. "When you turn a caravan of camels around, the last one becomes first," he joked. Mr. Mordashov has been involved in the steel industry for most of his life. The son of an engineer at the Severstal mill in Cherepovets, about 500 kilometres northeast of Moscow, he joined the company at the age of 21 as an accountant. The mill was a classic Soviet-style operation, built on the orders of Joseph Stalin after the Second World War. Mr. Mordashov quickly rose through the ranks and became chief financial officer in 1992, just as economic turmoil gripped the country. Russia's rush toward privatization in the 1990s left Severstal in the hands of local managers and employees. Within four years Mr. Mordashov took control, putting himself in charge and eventually owning nearly 90 per cent of the company. He modernized the operations and acquired steel companies abroad, including Lucchini SpA of Italy and Rouge Industries Inc. of Dearborn, Mich., the seventh-largest American steel producer. Since 2003, Severstal's profit has more than doubled to $1.3-billion last year on $8-billion in sales. Severstal has worked on a variety of joint ventures with Arcelor and the two companies have talked about a possible merger. Arcelor's chairman, Joseph Kinsch, said yesterday that the talks became more intense recently after bitter rival Mittal Steel Co. NV launched a hostile takeover bid, which currently stands at ?25.8-billion ($36.3-billion), "Mittal's offer was a catalyst to see how we could find our agreement," Mr. Kinsch said. Mittal officials scoffed at the Arcelor-Severstal tie-up yesterday, calling it a "second-class combination." Mittal spokesman Paul Weigh warned that Mr. Mordashov could quickly have a large say in how Arcelor is run. "Effectively he can do whatever he wants with the company," he said. Mr. Mordashov promised to vote along with other board members on the Mittal proposal and he has a stand-still agreement that prevents him from acquiring any more Arcelor shares for four years. Yesterday he also addressed any discomfort investors might have about getting close to a Russian. "Come to Russia and see," he said. "It's very different from the Soviet Union." Arcelor shareholders are slated to vote on the Severstal deal next month, just as a sweetened offer by Mittal is expected to be finalized. In Canada, Arcelor made one other move yesterday. Dofasco said Don Pether will retire as CEO in July and be replaced by long-time Arcelor executive Jacques Chabanier. Mr. Pether has been at Dofasco for 36 years, the last three as CEO. He will become Dofasco's chairman. Steel giants Market share: 6 per cent of global steel output Employees: 124,000 Revenue: ?40.6-billion ($57.2-billion) Controlling shareholder: Severstal chairman and founder Alexei Mordashov, with 32 per cent "We very heavily underestimate the steel industry. We are probably at the beginning of a new cycle of the world economy, with the development of China and India and Brazil and Russia." SEVERSTAL FOUNDER ALEXEI MORDASHOV, SEEN HERE, LEFT, WITH ARCELOR CHAIRMAN JOSEPH KINSCH AND CHIEF EXECUTIVE OFFICER GUY DOLLE AT THE START OF YESTERDAY'S NEWS CONFERENCE IN LUXEMBOURG [Non-text portions of this message have been removed] ------------------------ Yahoo! Groups Sponsor --------------------~--> Protect your PC from spy ware with award winning anti spy technology. 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