Dept. of Energy Denies $730M Severstal Loan

A $730 million loan expected to be granted to has been denied, the U.S. Department of Energy confirmed Friday.

The Advanced Technology Vehicle Manufacturing loan would have gone toward modernization efforts at the Russian steel company's Dearborn plant, allowing them to produce high strength steel for automobile manufacturers.

DOE officials did not release a reason for not closing the loan, but told the Detroit Free Press Friday afternoon that they think the project is still worth pursuing.

"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," DOE spokesman Damien LaVera told the Free Press. "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 loan, , was expected to result in the creation of more than 2,500 construction jobs and over 260 permanent manufacturing jobs in Severstal's Dearborn plant, located on the south end of the city.

In November, two Republican U.S. senators–Indiana’s Dan Coats and Pennsylvania’s Pat Toomey–. House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.). Their claims centered around the assertion that the creation of high strength steel is also being done by several manufacturers, making the purpose of the loan superfluous.

The DOE has not confirmed that the concerns of the senators played into their decision to cancel the loan.

Congressman John Dingell chastised the department's decision, asking for a reason for denial of a loan that could, he believes, help auto manufacturers use domestically produced steel to improve the quality and fuel efficiency of their vehicles.

“This is a sad day in Southeast Michigan, a place that is continuously working hard to advance the president's goal of out-innovating and out-building the rest of the world," Dingell said in a statement. "I urge the Department of Energy to not turn their back on projects that create in-demand, well-paying jobs like Severstal.”

There is no word on what the denial of the loan will mean for the jobs expected to be created. According to the Detroit Free Press, around half of the new positions have already been filled.