U.S. orders sale of Sparrows Point

Antitrust decision puts Md. steel plant on market

February 21, 2007|By Allison Connolly | Allison Connolly,Sun reporter

For the third time in as many years, Sparrows Point is up for sale. And this time it's a rush job.

The Justice Department wants the sprawling Baltimore County steel plant to be under new ownership within 90 days to make sure that its current boss, Mittal Steel Co. NV, does not have too much control over the market for tin plate used to make cans for foods, aerosol sprays, paints and other products.

Netherlands-based Mittal, which is merging with Luxembourg-based Arcelor SA in a $33 billion deal to create the world's largest steelmaker, had wanted to sell its plant in Weirton, W.Va., instead.

Selling Sparrows Point, an integrated manufacturer that can make steel from scratch, rather than the Weirton plant "most reliably" addresses antitrust concerns, Thomas O. Barnett, the assistant attorney general in charge of the department's antitrust division, said yesterday in a statement announcing the order.

"Sparrows Point is a profitable and diversified facility" and "unlike the Weirton mill, would not have to develop new sources of supply for this critical input upon its separation from Mittal Steel," the Justice Department said.

Mittal cannot appeal the order but could be granted up to 60 more days to find a buyer, according to a Justice Department spokeswoman. The Justice Department would have to sign off on any deal.

Officials at Mittal declined to comment yesterday. Mittal has a previously planned conference call scheduled with analysts today. An official at the United Steelworkers union pledged to fight the ruling.

What a sale would mean for the future of Sparrows Point - the second-largest private employer in Baltimore County with about 2,400 workers - is unclear, but some have raised the possibility that a new owner might invest more in the complex. Mittal, a relentless cost-cutter, pits its plants against one another, shifting production to the most efficient.

David S. Iannucci, Baltimore County's economic development director, called the Justice Department decision "a vote of confidence in the long-term viability of Sparrows Point steel-making."

"It'll be the fourth owner of this property in about a five-year period, and inherently that's going to lead to some uncertainty. But at the end of the day," Iannucci said, "I think this is a very positive development for steel-making in Baltimore County."

Owned by the now-defunct Bethlehem Steel Corp. for 87 years, Sparrows Point was taken over by International Steel Group in 2003. ISG sold out to Mittal in 2005.

A United Steelworkers official, however, said the Justice Department's ruling is bad news.

"The decision is unfortunate," David R. McCall, head of the union's international Mittal Steel committee in Columbus, Ohio, said in a statement. "It makes Mittal USA not as strong as it could be and does not assure Sparrows Point or Weirton a secure future. We will ask for a review and will assure our members who are employed at Sparrows Point that we will make a dedicated and strong effort to reverse the decision."

John Cirri, president of United Steelworkers Local 9477, which represents production and maintenance workers at Sparrows Point, said yesterday that it would support the international committee's challenge.

Analysts expect a number of foreign steelmakers to show interest in the plant. Illinois-based Esmark Inc., which has a preliminary deal with Mittal to buy the Weirton facility if the Justice Department approves, said it is eager to buy the Baltimore County plant as well.

James P. Bouchard, Esmark's chairman and chief executive, said he told Mittal yesterday that his company still wants the Weirton plant and would buy Sparrows Point if given the chance.

"We want to proceed," he said.

Yesterday's decision arose as the result of an antitrust suit the Justice Department filed in August to block the Mittal-Arcelor merger. A proposed consent degree required Mittal to sell a Canadian subsidiary owned by Arcelor, or, if that proved impossible, Weirton or Sparrows Point, with the Justice Department having final say. Mittal agreed to sell the subsidiary, Dofasco Inc., to German steelmaker ThyssenKrupp AG, but was unable to win approval from the Dutch trust that controlled it, paving the way for the Justice Department to choose between Sparrows Point and Weirton.

While an order to sell Sparrows Point was always a possibility, the decision appeared to have caught many off guard.

Esmark's Bouchard said he was in Weirton yesterday meeting with union officials when they got word.

"I think it took the wind out of everybody," Bouchard said.

But he said he didn't dwell on it long. He told Mittal officials that Esmark, a steel distributor that recently won control of West Virginia's Wheeling-Pittsburgh Corp., wants to continue negotiations over Weirton and make a bid for Sparrows Point.

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