The Administration of Barack Obama has agreed to provide a loan in the amount of USD 730 million for renovating a Michigan factory operated by the Russian steel group Severstal. The factory is supplying parts to American car makers.

The credit facility will be provided under the auspices of the DOE Energy’s Advance Technology Vehicle Manufacturing program. The purpose of the program is to assist U.S. car producers in manufacturing new technologically-advanced vehicles. The Russian metals conglomerate Severstal intends to use the credit line to upgrade its facility in Dearborn.

The U.S. division of Severstal supplies components made of steel to car makers GM, Ford, and Chrysler. The plant at Dearborn also produces high-tech steel products that can be utilized in building cars with smaller weight and a better safety rating. Once fully modernized, the Dearborn plant will provide extra durable steel products to the markets of Europe and Asia, so that automobile manufacturers from those regions will also be able to use the advanced steel technology.

Data from the American Iron and Steel Institute indicates that the use of extra durable strength can increase the weight of the vehicle by as much as 25 percent. As a consequence, emissions can be cut by as much as 15 percent.

The Dearborn facility was purchased by Severstal from Rouge Steel in 2004. At the time, Rouge Steel was a division of the Ford Motor Company.