Order raises questions for Md. steel mill

February 21, 2007|By Meredith Cohn | Meredith Cohn,Sun Reporter

The Justice Department's order that Mittal Steel Co. NV sell its Sparrows Point mill in Baltimore County raises questions about the future for the plant and its workers. Here's a look at some of the issues:

Why did the government order Mittal to sell Sparrows Point?

It was concerned that Mittal's purchase of Luxembourg-based Arcelor S.A. would give it too much market power over tin- plated steel products in North America. The Justice Department named Sparrows Point specifically because the mill produces both raw steel slabs and final products such as food containers and aerosol cans. The mill that Mittal proposed to sell in Weirton, W.Va., has shut down its blast furnace and would have to find a supply of steel elsewhere if it was separated from the larger company.

How much time does Mittal have to satisfy the Justice Department's order?

Mittal has 90 days to sell Sparrows Point. Federal regulators could grant one or more extensions of up to 60 days.

What happens to workers? Automation and consolidation in the industry already have taken a toll on workers. The mill now employs about 2,400, down from 26,500 nearly four decades ago. It's unclear what will happen under new owners, but workers expressed some optimism that the buyer would invest in the facility. They believe their contract, which expires next year, gives them some say in the process.

Who are the potential buyers? Several potentially, though the price tag might be too high to attract a U.S. buyer. Steel companies from Russia, China and Germany, for example, have bought American mills or expressed interest. German steelmaker ThyssenKrupp AG once was interested in buying Sparrows Point and Dofasco, Mittal's Canadian subsidiary, but said yesterday it no longer wants the Baltimore County mill. Chicago-based Esmark Inc. has offered to buy Weirton and expressed interest in Sparrows Point.

What are the mill's selling points?

American plants were once viewed as not cost competitive but have been made leaner through years of bankruptcies and consolidations. Sparrows Point is on the East Coast and has ocean access to rail and highways. That would be a big plus for a foreign company looking to bring in cheap iron ore, coal or slab for finishing. Bethlehem Steel spent more than $600 million to build a cold mill and reline the blast furnace at Sparrows Point before its bankruptcy filing in 2001. That helped it become the biggest and most efficient furnace in North America.

What are the mill's challenges?

The facility is far from big customers, such as automakers and appliance manufacturers in the Midwest. It is also likely to be expensive.

Meredith Cohn

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