| Page 2 of 2 < |
Russian Firm Buys Sparrows Point Plant
Industry analysts say the Sparrows Point plant will require significant investments in coming years.
(By Lucian Perkins -- The Washington Post)
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  |
Severstal imports coke, the main fuel in blast furnaces, from China to its U.S. facilities, an expensive endeavor. The company will begin looking for a local supply, Veraszto said.
Severstal will concentrate on improving the plant's infrastructure to make it more efficient and safe, Veraszto said. The plant is running at only two-thirds capacity. Severstal's announcement foresaw "significant business improvements and synergies at Sparrows Point in conjunction with a five-year investment program at the plant."
The changes may have to be more drastic than that, said metal analyst Charles A. Bradford of Soleil Securities.
The Global Warming Solutions Act, which is likely to pass in the Maryland House of Delegates and has backing from Gov. Martin O'Malley, would require a 25 percent statewide reduction of carbon emissions by 2020.
"Significant parts of the plant require huge investments every several years," Bradford said. "You can't count on politicians. At the last minute they could change the rules."
Yet the Baltimore County plant is a boon for Severstal's U.S. business, particularly because of its port, as well as access to highways and rail lines, analysts agreed.
"With the dollar all but collapsed, they have great export as well as import opportunities," Applebaum said.
Bradford said Sparrows Point could also lend its production Severstal's Rouge Steel plant in Dearborn, whose blast furnace was rocked by an explosion in January and will not be completely fixed for two years. The purchase would make it easier to ship steel from Sparrows Point, rather than Russia, for finishing, he said.
"The larger and more global you are, it makes you a more stable entity," Bradford said.
This is not the first time the plant has changed hands.
Bethlehem Steel owned Sparrows Point from the early 1900s until the company declared bankruptcy.
In 2003 the plant was purchased by International Steel Group, which merged with LTV Steel to create the largest U.S. steel producer.
Mittal bought ISG for about $4.5 billion in 2004, merging it with his Ispat International and LNM Holdings. Then in 2006, Mittal merged with Arcelor, prompting the divestment.
For now, Sparrows Point is likely to remain with Severstal.
"I think the acquisition game is slowing down," Bradford said. "The easy pickings have already been taken."
