Russians Invade West Virginia

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Judging from American newspaper coverage, you can be forgiven if, by now, you think that the only companies existing in all of Russia are YUKOS (OTC BB: YUKOY) and Gazprom, and that their primary business activities are flouting U.S. court orders and stealing each others' subsidiaries.

Fact of the matter is, though, Russia has a whole bunch of companies in industries other than oil. And some of them actually pay cash money when they make their purchases. Case in point: yesterday's announcement that Russia's second-largest steelmaker, Severstal (OTC BB: SVJTF), has ponied up $160 million over four years to upgrade the facilities and take half-ownership in a coke-producing site belonging to Wheeling, W.Va.'s Wheeling-Pittsburgh Steel Corporation (Nasdaq: WPSC). (Coke, in this instance, referring not to Coca-Cola's (NYSE: KO) carbonated delight but rather to the distilled coal product used in smelting steel.)

When completed in March 2005, this will mark Severstal's second major buy in North America and will help secure for the company a steady supply of coke for use in its operations. It will also be Severstal's third serious attempt to expand its operations on this continent. Back in January 2004, Severstal made its first big buy -- beating out U.S. Steel (NYSE: X) in a bid to purchase Michigan's Rouge steelworks out of bankruptcy for $285 million. With that acquisition, Rouge became "Severstal North America Inc." Severstal's next move was north of the border, when it bid on, but failed (temporarily, at least) to acquire Canada's steelmaker Stelco (OTC BB: SLOAF) in a deal that could have been worth in excess of $1 billion. Stelco was able to fend off Severstal's advances at the time, by obtaining a $750 million bailout loan from Germany's Deutsche Bank (NYSE: DB), which helped to return the steelmaker to solvency.

Severstal, which was not at all pleased at the interference, went so far as to file a lawsuit in Ontario to try and block the bailout. Today, industry analysts suggest that the Russian firm's interest in buying out the Canadian steelmaker continues unabated.

Don't read the papers? Wondering what's going on with this YUKOS operation? Read all about it in:

• Russian Shell Game
• Deconstructing YUKOS
• YUKOS Cored
• YUKOS' Hollow Victory
• Coming to America (to Die)

Fool contributor Rich Smith owns no shares in any company mentioned in this article.