September 17, 2019

Severstal invests in innovative steel alloy producer Arcanum Alloys

PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's largest vertically integrated steel and mining companies, announces that it has invested in Arcanum Alloys, Inc., a Michigan-headquartered company that develops innovative steel-based alloys. Severstal is the lead investor of the round, investing approximately six million dollars in this funding round. Among other major investor in the company is the leading American venture capital firm Khosla Ventures.

Arcanum Alloys, Inc. has developed a unique technology for the production of surface optimized diffusion alloys. With this platform technology, the company is able to produce a wide variety of products with enhanced properties. Their first product offers aesthetic and corrosion properties equivalent to stainless steel, but with superior formability and at lower operational and capital costs. These products are targeted at customers in the automotive and construction industries as well as manufacturers of household appliances.

George Gogolev, Head of Severstal Ventures, commented:

“We are delighted to announce Severstal’s investment in Arcanum Alloys, Inc., which we believe is a leading innovative metallurgy company. By increasing our exposure to the latest technologies and alternative methods for producing different types of steel, we continue to expand Severstal’s competitive advantages and drive innovation in the steel industry. The Company expects to receive financial returns on its investment in Arcanum Alloys, and also to become one of the first globally to be able to offer these products to its customers. Severstal plans to present to our clients steel produced using Arcanum Alloys’ technology on our pilot production at Cherepovets Steel Mill in 2020.”

Andrey Laptev, Director of Business Development and Corporate Venture Projects at Severstal, said:

“I would like to congratulate our team on its first direct investment in a promising venture project. Russia remains a big net importer of stainless steel, with this innovative product we hope to offer to our domestic clients a better alternative to certain stainless steel grades. This deal is closely aligned with Severstal’s strategic focus on new business opportunities. It complements our previous investments into high profile venture funds, which have given us access to a huge pipeline of projects and technologies. Severstal aims to support great high-tech entrepreneurs in the global steelmaking industry, including helping them to enter and develop in Severstal’s key markets as well as providing them with platforms for pilot and acceleror programmes. We are working on several similar deals concurrently, which we hope to complete by the end of this year. Severstal Ventures’ annual investments amount to around 25 million dollars.”

Dan Bullard, Founder and CEO of Arcanum Alloys, said:

“This is an extremely exciting day for Arcanum Alloys. We are very excited to be working with Severstal. This investment allows us to continue to scale our technology, get our products to our customers, and, ultimately, carry out our mission to redefine the sheet steel industry.”