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. Last Updated: 07/27/2016

A Slow Burn of Ambition, Connections and Luck

The first step in Alexei Mordashov's path to becoming Russia's seventh-richest man, with a fortune estimated at $8.5 billion, was privatizing the steel mill where both his parents had worked as Soviet engineers.

Under the deal he struck Friday between his Severstal and Luxembourg's Arcelor, Mordashov will personally hold a one-third stake in the merged company, which will become the world's largest steelmaker and supplier of 20 percent of the world's automotive steel.

Suddenly, Mordashov, who is not well known outside Russia, is a figure of power and influence in world steel. Like other oligarchs, a slow burn of ambition, connections and luck propelled Mordashov to his wealth.

The 40-year-old father of three holds stakes in automobile factories, ports and wood-products companies.

At a news conference in Luxembourg on Friday, Mordashov explained how he won control of Severstal, the factory where his father worked and his first major asset. He was, he said, "the last camel in the caravan when everything got turned around."

Actually, his luck can be traced to his days as a college student. He studied economics at the Leningrad Economic and Engineering University, where he was an assistant for up-and-coming professor Anatoly Chubais, who later became the architect of the country's controversial 1990s-era privatizations. He also met students who later went on to hold high-level government positions.

It did not hurt that he went to school in the city where President Vladimir Putin is from.

After graduation, Mordashov returned to the steel factory in the Vologda region town of Cherepovets, where his father was friends with the governor. He quickly rose to the position of financial director of the factory and, in 1992, oversaw its privatization.

He formed a company with himself as a majority shareholder, Severstal Invest. That company then bought the shares of the factory that were issued by the government in a voucher privatization. That left Mordashov, then 27, the majority shareholder of the company that became known as Severstal, according to media reports and analysts.

He said in an interview with Itogi magazine in 2000 that the privatization was unfair but that the factory was better managed under a private owner.

In one way, he remains apart from tycoons who are natives of the power centers in Moscow and St. Petersburg.

"He is strikingly different from the other oligarchs because he grew up in the factory," said Olga Kryshtanovskaya, a sociologist of the Russian elite.

Still, Mordashov's ability to parlay his initial steel holdings into a larger industrial conglomerate was possible because of his close ties to what is known as the St. Petersburg group in Putin's Kremlin, a tight nexus of powerful acquaintances in business and politics dating to Mordashov's student days, she said. He has diversified into autos and other sectors during Putin's reign.

Fellow graduates of the university, for example, include Finance Minister Alexei Kudrin, who is also a member of the board of Gazprom, a major purchaser of Severstal steel pipes.