Mittal prefers to sell Weirton

For Sparrows Point, `it's good news,' plant manager says

September 28, 2006|By Allison Connolly | Allison Connolly,SUN REPORTER

Mittal Steel Co. NV said yesterday that it plans to sell its Weirton, W.Va., mill rather than Sparrows Point if it's compelled to dispose of a U.S. property to settle antitrust issues.

Netherlands-based Mittal said it had identified at least 10 potential buyers for the West Virginia property, easing concerns at the Baltimore County plant, which Mittal acquired in 2005. Sparrows Point employs nearly 2,500 salaried and hourly workers.

Mittal must sell either Weirton, Sparrows Point or Canadian steelmaker Dofasco in the wake of its $38 billion merger with Luxembourg-based Arcelor SA to appease Justice Department officials, who say the combined company, Arcelor Mittal, would have a monopoly on tin production in the United States.

Mittal has promised to sell Dofasco to German-owned ThyssenKrupp AG, but despite the merger agreement, Arcelor officials refuse to let it go. In one of a series of moves to fend off Mittal's nearly six-month hostile takeover bid, Arcelor transferred Dofasco to a Dutch trust, making a sale without Arcelor's consent impossible.

The Justice Department has given Mittal until Nov. 28 to sell Dofasco, with the option of a 60-day extension. If Mittal is unable to sell Dofasco, the Justice Department will give Mittal 90 days to sell either Sparrows Point or Weirton.

In a slide presentation posted on Arcelor Mittal's Web site yesterday, Mittal's Chief Financial Officer Aditya Mittal said the company still wants to sell Dofasco but has begun discussions with the Justice Department about Weirton.

Sparrows Point was not mentioned in that slide, but later in the presentation, the Point was listed as a "key facility" in the "largest and most efficient industrial network in the Americas."

Ultimately, the Justice Department must sign off on which plant is sold and to what buyer.

Employees at Weirton and Sparrows Point were cautiously optimistic yesterday about the development.

"Overall, it's good news for us," said Sparrows Point General Manager Thomas Russo. "Not knowing who the potential buyer would be, it wasn't a good place to be."

"We've been going through a period of uncertainty," echoed John Cirri, president of United Steelworkers Local 9477, which represents production workers at the plant.

Sparrows Point isn't out of the woods entirely. Justice Department officials toured Sparrows Point last week, Russo said.

"It's not a done deal until the Department of Justice says it is, but it's a good sign they're leaning that way [toward Weirton]," Russo said.

A Justice Department spokeswoman declined comment.

In Weirton, workers have been lobbying Mittal to sell the plant to an investor who will restart the steelmaking furnaces. Mittal idled them last year and sent the hot-metal work to Sparrows Point because the Baltimore County plant was more efficient. About 1,000 workers in Weirton lost their jobs, and the plant was reduced to a finishing mill.

"They're good facilities, and we're willing to make it as efficient as we possibly could make it," said Mark Glyptis, president of the Independent Steelworkers Union, which represents workers at the Weirton plant.

Glyptis said Weirton has more capacity to produce tin than either Sparrows Point or Dofasco and would be a valuable acquisition. He said the union proposed a plan to Mittal to reduce costs by $90 million a year before Mittal decided to shut down the furnaces.

Mitchell Hecht, a former executive at International Steel Group, which sold Weirton and Sparrows Point to Mittal, has expressed interest in buying Weirton and restarting its furnaces, Glyptis said.

Steel analyst Charles Bradford, of New York City-based Bradford Research Inc., is skeptical that there are 10 serious buyers for Weirton. But he said there is room for another player in the tin market: Mittal and U.S. Steel Corp. control more than 80 percent of tin plate production in the United States. The rest is made by Wheeling-Pittsburgh Steel. The tin is used to make cans for food and hairspray, among other products.

"The market for tin plate is a good market," he said.

Bradford said ThyssenKrupp is not interested in tin, and wants Dofasco because it provides high-grade steel sheet for the lucrative auto market

Also yesterday, Arcelor Mittal announced that it would distribute 30 percent of its profits to shareholders, promising a minimum annual dividend of $1.30 a share.

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